The volatility of world oil prices has worried experts who say a free-fall could prompt Correa to halt repayments foreign debt.
Ecuadorean President Rafael Correa has threatened to expel foreign oil companies if they fail to lift dwindling output in the OPEC nation.
Correa, a leftist former economy minister, issued the warning in a speech over the weekend, only days after he won a referendum to increase his sway in the country's oil and mining sectors.
"Don't play with fire. You (companies) either raise output or leave the country," Correa said on Saturday during his weekly media address. He added that output of foreign oil companies has declined since negotiations for new contracts began last year.
He also threatened to nationalize oil fields owned by Brazil's Petrobras over delays to transfer an oil block to the state. Both sides had already agreed to hand over the block inside a protected Amazon jungle park.
Oil exports are Ecuador's main source of revenue and key to Correa's plan to boost public investment to help the poor.
The volatility of world oil prices has worried experts who say a free-fall could prompt Correa to halt repayments foreign debt.
Nearly a year ago, Ecuador initiated talks with foreign companies including China's Andes Petroleum and Spain's Repsol to switch to new contracts that would allow the state to keep all the oil the companies extracted, in exchange for a fee. In the meantime, most companies have halved investments in Ecuador until they reach new deals.
Andes has signed a temporary deal with Ecuador while it negotiates a new service contract. Other companies have started negotiations.
Correa in the past has threatened to expel companies over dwindling production, but has so far stayed away from nationalizations. Correa's ally, Venezuelan President Hugo Chavez, has nationalized major sectors of its economy in his drive to bring socialism to his country.
Ecuador produces around 500,000 barrels of oil per day, extracted almost evenly by the state company, Petroecuador, and foreign companies.
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