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.

Monday, February 16, 2009

Ecuador to freeze Repsol, Perenco assets over tax

By Alonso Soto

QUITO, Feb 14 (Reuters) - Ecuadorean President Rafael Correa said on Saturday his government will freeze the assets of Spanish oil company Repsol (REP.MC) and France's Perenco over demands for taxes owed.

Correa, who often threatens foreign companies to pressure them into better contract terms, said Repsol and Perenco owe hundreds of millions of dollars stemming from a windfall tax imposed in 2007.

"Because they have not paid their taxes, I have ordered coercive measures against Repsol and Perenco," Correa said in his weekly media address. "They are trying to treat us like a colony."

Correa did not specify which assets his government could seize. The government has said in the past that Repsol owes around $500 million in taxes.

Oil Minister Derlis Palacios later told Reuters in an e-mail that both companies will "either pay the debt or their stuff will be seized."

Under Ecuadorean law, the state has the right to temporarily seize assets and freeze bank accounts to force a company to pay debts, said a senior government official, who who asked not to be named.

He added that the companies will have time to settle their debts before the OPEC nation takes action.

Correa, scrambling to finance his socialist government's plans after oil prices crashed, has repeatedly threatened to expel oil companies to put pressure on them to sign new deals that give the state a bigger share of their revenues.

The Repsol spokesman in Quito, Federico Cruz, told Reuters his company has not yet been notified of the measure.

"Negotiations are very advanced and we hope to sign a new contract soon," he said, referring to temporary deals the government wants with companies to gain more control over the key sector.

Local officials from Perenco were not immediately available to comment.


"An asset freeze will be the last resort in these cases," said a senior oil ministry official, who asked not to be named. "Companies can offer a repayment plan."

Repsol and Perenco own oil installations in Ecuador that include drilling rigs, 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.

Correa, who faces reelection on April 26, often opts for a tough stance against foreign interests to rally support among Ecuadoreans. Last week, he expelled a U.S. diplomat for meddling with police affairs.

Repsol and other oil companies have sued Ecuador, saying the government violated their contracts by taking nearly all of their revenues above a benchmark price for each barrel extracted.

The companies say Correa's windfall tax has made their business in Ecuador unprofitable.

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