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.

Thursday, February 26, 2009

Ecuador reaches deal with Repsol over debt

Jose Llangari

QUITO, Feb 25 (Reuters) - Ecuador has agreed with Repsol to settle a pending debt after the government threatened to freeze the Spanish oil company's assets, Spain's Foreign Minister Miguel Angel Moratinos said on Wednesday.

Ecuador earlier on Wednesday softened its tone against the oil major, saying it had not plans to confiscate oil companies' assets after the initial threat.

"Yes, there is an agreement," Moratinos told reporters when asked if both sides had reached an agreement over the debt row.

Moratinos, who was visiting Quito and met President Rafael Correa, declined to give any details on the terms agreed.

Correa, a socialist who often threatens foreign companies to get better contractual terms, had said his government was moving to freeze the assets of Repsol and France's Perenco over $830 million in late taxes.

No government official has confirmed if an agreement was reached with Perenco to settle the late tax row

"In the case that we don't reach an agreement, we could eventually withhold their (companies) funds, but we will not seize or confiscate because in this country we respect the rule of law," Alexis Mera, Correa's top legal adviser, told reporters.

Ecuadorean officials met on Wednesday with Repsol executives, including upstream director Nemesio Fernandez Cuesta, to negotiate a way out of the stalemate.

Executives of both Perenco and Repsol in Quito were not immediately available for comment.

Under Ecuadorean law, the state has the right to temporarily seize assets and freeze bank accounts to force a company to pay debts.

Ecuador alleges that Perenco and Repsol did not pay a windfall tax that companies said makes their business inviable in the OPEC-member nation. Both companies have filed lawsuits over the windfall tax which they say violates their contracts.

Repsol and Perenco own oil installations in Ecuador which include drilling rigs and machinery, and shares in a privately owned pipeline.

Repsol operates three oilfields in the Amazon jungle with a production capacity of 65,000 barrels per day. Perenco produces nearly 30,000 bpd, according to government data.

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