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.

Tuesday, January 12, 2010

Ecuador gives oil firms until March to sign deals

* Correa warns companies to invest or leave the country

* Private oil production seen slipping in 2010

By Hugh Bronstein

QUITO, Dec 5 (Reuters) - Oil companies operating in Ecuador have until March to sign new contracts or the government will "change the rules of the game" to give the state more control over the sector, President Rafael Correa said on Saturday.

The socialist leader was first elected in 2006 on promises of helping the poor and taking a tough stance with international investors who he accuses of pillaging the country's wealth.

Correa's rhetoric has toughened as the negotiation of contracts approaches. But he apparently does not want to go so far as to choke off the private investment that his OPEC-member country needs to bolster its key oil sector.

"Either they sign the new contracts by March or we are going to change the rules of the game and the relationship between the companies and the state," Correa said during a televised town hall meeting.

"I will meet with the companies and we are going to speak plainly. They will invest or leave the country," he said.

Private firms -- such as Spain's Repsol, Brazil's Petrobras and Italy's Eni -- are expected by the government to produce 195,342 barrels of oil per day next year, down from 201,369 barrels per day in 2009.

Correa wants them to give up their profit-sharing deals and sign new contracts that would make them service providers.

His relationship with the private sector hit a low point last year when Correa refused to honor $3.2 billion in global bonds, even though the government had the money to pay. Investment has also been slowed by the world financial crisis.

The president sides with indigenous groups that have brought a $27 billion environmental damages lawsuit against U.S. petroleum company Chevron Corp, which no longer has operations in the Andean country.

On Saturday he told a crowd of cheering supporters that previous administrations allowed state petroleum company Petroecuador to approve sub-standard private investment plans.

"We are going to find out who was responsible for that and take them to court, if possible," he said.

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