The people of Ecuador are rising up to refound their country as a pluri-national homeland for all. This inspiring movement, with Ecuador's indigenous peoples at its heart, is part of the revolution spreading across the Americas, laying the groundwork for a new, fairer, world. Ecuador Rising aims to bring news and analysis of events unfolding in Ecuador to english speakers.

Sunday, October 07, 2007

Ecuador issues foreign oil decree

By Daniel Schweimler
South America correspondent, BBC News
, 5 October, 2007

Ecuadorean President Rafael Correa has signed a decree giving the state a greater share of profits from foreign oil companies working in his country.

He said the 50% of windfall oil profits stipulated in a law passed last year was not enough, and the state should now receive 99%.

It is one of the radical reforms promised by Mr Correa to spread Ecuador's wealth to the country's poor.

But the size and timing of this latest move took many by surprise.

It will worry foreign investors and oil companies which operate in Ecuador.

Windfall profits are made whenever prices on international oil markets exceed prices established in existing contracts.

Venezuelan model?

The foreign oil companies complained in 2006 when it was agreed that all such profits should be split 50-50 with the state.

But now Mr Correa says the state is not getting enough and will now take 99%.

His decree said revenues should be distributed in a more just way.

Critics have accused the Ecuadorean government of copying radical measures introduced in Venezuela by President Hugo Chavez.

But Ecuador's Oil Minister, Galo Chiriboga, said the government was not nationalising anything.

Among the foreign companies operating in Ecuador are Brazil's Petrobras, Perenco of France and the Spanish-Argentine company Repsol YPF.

They help to produce more than 500,000 barrels of crude oil a day - a major contribution to Ecuador's economy.

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