Ecuador Will Compensate for Any Seized Oil Assets, Correa Says

May 1, 2010

By Nathan Gill

May 1 (Bloomberg) -- Ecuador, the smallest member of the Organization of Petroleum Exporting Countries, will compensate oil companies for any assets seized if ongoing contract negotiations fail, President Rafael Correa said.

“Companies need to understand that we are entering a new era in Ecuador and we won’t permit more abuses,” Correa said to a cheering crowd at the presidential palace in his weekly speech to the nation broadcast today. “We will pay what we have to pay, but we won’t let these companies impose conditions on our oil.”

Oil producers in Ecuador, including Spain’s Repsol YPF SA and Houston-based ConocoPhillips, may lose their assets if they don’t agree to change current production-sharing contracts for new service ones, Correa said. The speech was pre-recorded on April 29 in Quito.

The president said last month he will send Congress a bill to expropriate oil assets from companies that don’t sign new contracts in an attempt to jump-start talks that have stalled since the nation’s Congress rewrote the constitution in 2008. Correa is trying to boost production of oil, the country’s biggest export, as declining revenues crimp government finances.

OPEC’s members are Algeria, Angola, Ecuador, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, the United Arab Emirates and Venezuela.