QUITO, Ecuador: Ecuador plans to seize 70 percent of oil produced daily by Perenco SA, nearly quadrupling its cut until it collects enough to cover the company's contested back taxes, a top energy official said Wednesday.
Energy Minister Derlis Palacios said the government will seize about 19,000 barrels of locally produced crude from Paris-based Perenco a day, but won't touch other company assets. At current crude prices of about $36 a barrel for Ecuadorean crude, it would take the country about 494 days to recover its debt.
Under Perenco's current contract, Ecuador has received 18 percent of its daily output.
President Rafael Correa in February ordered Perenco to pay $338 million in unpaid taxes, accumulated since a 2007 decree raised the levy on windfall oil income to 99 percent. Madrid-based oil company Repsol YPF last week agreed to pay $447 million in back taxes and interest by 2014.
Cash-strapped Ecuador relies on oil exports for 40 percent of its federal budget. It has renegotiated energy deals with Repsol, China's Andes Petroleum and Brazil's state-run Petrobras SA to boost its share in oil profits by trying to switch to fee-for-service rather than per- barrel contracts. It also paid U.S.-financed City Oriente $69 million to exit its contract early.
Perenco, which produces an average of 27,500 barrels of crude per day, or 5.5 percent of Ecuador's daily output, is the last company not to renegotiate its contract.
Palacios on Wednesday blamed Perenco's U.S.-based minority partner Burlington Resources for stalling negotiations on the outstanding taxes. Burlington filed a suit before a World Bank arbitration body in June 2008 to avoid the payments. A decision has not yet been issued.
Calls for comment were not answered Wednesday at Perenco's Quito office or at Houston-based ConocoPhillips, which bought Burlington in 2006.
Falling oil prices have slashed government revenue and now have Ecuador, South America's fifth-largest oil producer, forecasting a $3.5 billion trade deficit for 2009.
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