QUITO -(Dow Jones) May 10, 2020- Ecuador's executive branch will send to the National Assembly by mid-June an urgent law that will reform the nation's hydrocarbons law.
That will allow the government to speed the shift from production contracts to service contracts for oil companies operating in Ecuador, Nonrenewable Natural Resources Minister Wilson Pastor said Monday in a meeting with foreign reporters.
Pastor said that the draft of the law is ready and will be given over to President Rafael Correa later Monday.
Correa's administration wants to end the current production-sharing deals and replace them with service contracts.
An urgent law has to be taken up by the legislature within 30 days.
The bill proposes that large private sector companies will have 120 days to negotiate the change to service contracts, while smaller companies will have 180 days.
Both dates are from any law are promulgated and published in the nation's official gazette.
Pastor reiterated that the government wants 25% of gross profits and that companies won't be reimbursed for investments, but instead will get a tariff that takes into account spending, costs, and profits.
Pastor said that if no deal is reached with the various companies, then they will have to leave Ecuador and will receive what he called a fair price for their assets.
Pastor said that there are 34 contracts with various companies.
The shift will also include the so-called marginal fields, or low-production fields, and all types of contracts.
Government officials have said that the negotiations will give priority to eight contracts held by five companies: Italy's Eni SpA, Spain's Repsol YPF SA, Brazil's state-run Petroleo Brasileiro SA, China's Andes Petroleum Co., and PetroOriental de China.
The negotiations will take place separately with each company.