Correa: If oil companies complain, Ecuador takes 100% of windfall profits

via EFE, October 6, 2007

Ecuadorian President Rafael Correa warned Saturday that if oil companies complain about the new distribution of windfall oil profits, of which the state treasury is set to take 99 percent, he'll also take back the 1 percent he's allowing them as a "concession."

"If they get annoyed, I'll pass a new decree saying that 100 percent" of these surplus profits are for "the oil's rightful owners" who are the Ecuadorian people, he said, and recalled that according to the constitution, the nation's natural resources are the property of the state.

Correa said on his weekly program that next Monday the government will meet with representatives of foreign oil companies to discuss the new contracts.

"If they complain, I won't give them even that 1 percent because this is a concession we're giving them," he said with reference to the tiny percentage of windfall profits from the surge in world oil prices that he is granting foreign oil companies.

The head of state said that in the meeting that Energy and Mines Minister Galo Chiriboga has scheduled with representatives of the oil companies next Monday, he will insist that the oil belongs to Ecuadorians and that the ideal contract for their operations in Ecuador would be one for "services rendered."

For that reason, he said that on Monday they will have a "sample contract" ready for the meeting for the information of oil company representatives.

"No more plundering, no more surrender, no more waste," Correa said, adding that oil "now belongs to all Ecuadorians."

The head of state, a 44-year-old economist, again denied that his decision to grant only 1 percent of windfall profits to the foreign oil companies is a "confiscatory" measure, as the lawyers of those companies have claimed.

The measure is nothing like confiscation "because crude, according to the constitution, is the property of the Ecuadorian people," and what is shared out is the additional value that private companies obtain from the high value of crude on the international market.

The profitability of private companies, laid down in contracts established with the government, "is being respected," the head of state said.

Ecuador is the fifth largest producer of crude in South America, with some 500,000 barrels per day, which makes it the most important sector of its economy and the source of financing for approximately 35 percent of the government's budget.