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.

Wednesday, October 17, 2007

UPDATE 2-Ecuador warns oil companies to pay $317 mln in Oct

QUITO, Oct 15 (Reuters) - Ecuador told foreign oil companies on Monday they had two weeks to pay the government $317 million in what the government says are unpaid debts from a windfall royalty approved in 2006.

State oil company Petroecuador said in a statement that the debt stems from the royalty that forced oil companies to hand over at least 50 percent of extra oil revenues generated above a set benchmark price in their contracts.

President Rafael Correa earlier this month surprised investors by hiking the windfall royalty to 99 percent amid record high oil prices.

Petroecuador said companies that fail to comply with their debts could face "legal actions."

Petroecuador said the debtor companies included China's Andes Petroleum, U.S.-owned City Oriente and Brazil's Petrobras.

These companies are also scheduled to start talks with the government that aim to overhaul their contracts so that the state keeps all the oil extracted by the firms. Current oil deals allow companies to keep part of the oil they produce in South America's No 5 oil producer.

The companies were not immediately available for comments.

Leftist Correa's move to hike royalties has echoed ally Venezuelan President Hugo Chavez drive to nationalize the oil industry in the OPEC nation. Ecuador's oil firms trade group has called the hike a virtual nationalization of the sector.

Ecuador's Attorney General Xavier Garaicoa has recently called on Petroecuador to pressure companies to pay their debts, and has warned that the state could terminate their contracts if they fail to comply.

Analysts say Ecuador's tough renegotiation stance could hurt the country's already feeble oil industry by scaring foreign investment. Private firms produce nearly half of the country's daily output of 530,000 barrels.

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