Ecuador Government To Invest $180 Million To Boost Petroecuador Prod - Min

CNNMoney.com, August 7, 2007

QUITO -(Dow Jones)- Ecuador's government is planning an additional investment of $180 million into the state-owned oil company Petroleos del Ecuador, or Petroecuador, to halt declining production levels, Economy Minister Fausto Ortiz said Tuesday.

Without this investment, Petroecuador's oil production will likely fall to 50 million barrels this year, down from the expected 60 million forecasted by the ministry, he said.

"We are complying with a commitment made by President Rafael Correa to deliver the necessary resources so that Petroecuador can adopt urgent measures to meet the goal of producing at least 60 million barrels," Ortiz told Dow Jones Newswires.

Ortiz said he expected the production decline to be reversed by year-end, which would in turn help bolster the government's own finances, the trade balance and economic growth, which reached just 0.08% of gross domestic product in the first quarter of 2007.

"The drop in oil production has a triple effect," Ortiz said. "By resolving this problem, we seek to improve the general performance of the economy by the end of the year and establish a good start to 2008."

Separately, on Monday, the mines and energy ministry said it will provide Petroecuador with $358.2 million from the Feiseh oil fund, of which $172 million will be spent on production improvements and the rest for other areas such as refineries.

Ortiz's production forecasts don't include the nearly 31 million barrels per year produced at three oil fields, Block 15, Eden-Yuturi and Limoncoha, which were confiscated last year from Occidental Petroleum Company (OXY), proceeds of which are put into the Feiseh oil account.

Including production from private-sector oil companies, Ecuador will produce around 185 million barrels of crude per year, or around 505,000 barrels per day, down from 196 million barrels in 2006.

-By Mercedes Alvaro, Dow Jones Newswires; 5939-9728-653; mercedes.alvaro@ dowjones.com