Correa announced Ecuador returns to OPEC next month

MercoPress, October 14, 2007
Ecuador is to rejoin the Organisation of the Petroleum Exporting Countries, OPEC, next month after a 15-year absence, announced on Saturday President Rafael Correa during his weekly radio program. The move reflects the increased state control over energy being taken by President Correa as promised during his electoral campaign. Correa also announced he would be asking Venezuelan advice on how to renegotiate oil contracts with international corporations. His administration is interested in changing current association contracts for simple service contracts and in that line of thinking he recently decreed that profits will be split 99% for the government and 1% for foreign companies, a radical change from the 50/50 split.

Correa returned late Friday from Venezuela where he met with his counterpart Hugo Chavez to talk on “integration and energy” issues after having participated in Colombia at the opening ceremony of a gas pipeline linking Colombia with Maracaibo, Venezuela. Correa was invited to the event by Colombian president Alvaro Uribe.

At Opec meetings, Ecuador is likely to side with its ally Venezuela, one of the group’s most hawkish members. Ecuador would be the smallest producer in Opec: it produced an average of just 545.000 barrels a day last year, according to the BP Review of World Energy, a standard industry reference.

Opec’s next heads of state meeting is scheduled for November 17/18 in Riyadh in Saudi Arabia. Opec oil ministers next meet in Abu Dhabi in December 5.

The return of Ecuador, which was a member from 1973 until it suspended its membership in December 1992, will raise the number of Opec’s members to 13. Its entry will raise the group’s share of world oil output from about 41.9% to about 42.7%, based on BP’s figures for last year.

Because Ecuador has never formally left the group, it can re-enter without the long entry process demanded of new members. However, its re-entry will further complicate the already delicate negotiations over allowed production levels for the group’s members.