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.

Friday, June 19, 2009

Ecuador sees no need for OPEC cut as oil rises

By Nelson Bocanegra and Alonso Soto
QUITO, June 9 (Reuters) - Ecuador Oil Minister Germanico Pinto told Reuters on Tuesday he sees no need for an OPEC output cut at the moment as world oil prices recover on the back of an improving economy and past production reductions.

"I don't think it is necessary at the moment," said Pinto, who was named to the top post on Monday. "Prices are higher not only because of an improving economy but also because of the effectiveness of past production cuts."

Oil prices have more than doubled since since February, rising with equities and helped by currency movements as a weaker greenback makes dollar-denominated commodities cheaper.

Oil prices climbed above $69 per barrel on Tuesday as the U.S. dollar retreated.

The Organization of the Petroleum Exporting Countries decided to keep its production unchanged at its last meeting and will gather again in September to analyze market conditions.

Ecuador, the smallest OPEC member, has seen private oil investment fall partly due to the dramatic plunge of oil prices earlier this year and its drive to rework oil deals to increase state control over the key industry.


Pinto, a former lawmaker, said his government is moving rapidly to rework oil agreement so the state can keep all the oil that foreign companies produce in exchange of a fee.

Current participation contracts allow companies to keep part of the oil they extract in Ecuador's Amazon jungle.

"We have said that those (companies) that don't want to play by these (new) rules of the game can leave," said Pinto. "But we are willing to sit down with companies to reach agreements."

He said he doesn't expect the upcoming negotiations to hurt investment, adding that there are many countries and companies interested in doing business with the Andean country.

President Rafael Correa, a leftist known for shocking investors, told Pinto on Monday to adopt a tougher line against oil companies. The U.S.-trained economist often threatens investors to get more benefits from them in negotiations.

Since he took office in 2007 Correa has raised taxes and threatened to end contracts if oil companies don't switch to new service deals. His aggressive line has prompted many companies to sue the country in foreign courts and cut investment.

The government has said it expect to ink the new deals later this year.

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