Ecuador appoints Pinto as oil and mining minister

Eric Watkins
OGJ Oil Diplomacy Editor

LOS ANGELES, June 16 -- Ecuador President Rafael Correa, vowing to crack down on international oil companies operating in his country, has sworn in Germanico Pinto as the country’s oil and mining minister.

"We're going to radicalize our citizens' revolution…and that radicalization implies demanding respect," said Correa after Pinto was sworn in. "Germanico will take a much firmer approach toward all these companies that think they can still keep abusing the country."

Correa said of the companies: "They refuse to pay taxes, and on top of that, they take us to arbitration and press charges against us seeking millions,” adding, “We are heading in the right direction. These multinational companies know they can't play around with Ecuador anymore.”

Shortly after assuming his new position, Pinto—essentially playing with words—said there was no need for the government to nationalize the oil industry “because the oil already belongs to the state.”

Without providing any details, Pinto said he will promote "a deep change in…how we have been developing productive activities as well as energy and environment activities."

Pinto also said current oil prices are reasonable, adding that he sees no need for a cut in output by the Organization of Petroleum Exporting Countries, which Ecuador rejoined last year.

Perenco woes
Pinto succeeds Derlis Palacios, who offered his resignation last month after failing to resolve several key disputes, including one with Perenco SA, which has declined to pay $338 million that Ecuador claims since raising taxes in 2007 to 99% on windfall oil earnings.

Perenco claims that the windfall tax violates its contract and has taken its case to the International Center for Settlement of Investment Disputes (ICSID), a branch of the World Bank.

In response, the Ecuadoran government seized 70% of Perenco’s output in March and tried to auction it in May, despite a ruling by ICSID calling for suspension of the sale until a final judgment had been reached.

Repsol YPF SA also has approached ICSID for resolution of the tax issue, while Occidental Petroleum Corp. has applied to ICSID for $1 billion in compensation for oil fields seized by Correa's predecessor in 2006.

Following Perenco's lawsuit, and faced with those of Repsol YPF and Oxy, Ecuador announced its intention to withdraw from ICSID on May 31, claiming that the court had a bias in favor of Western corporate interests.

According to analyst BMI, Palacios’s departure “heralds a further leftward shift of Correa's administration, whose radical agenda has been emboldened by a comprehensive victory following the April 2009 elections.”

In view of this, BMI said it expects the government to drive a harder bargain during the ongoing restructuring of the Ecuadorian oil industry, which aims to confine oil operators to a position of service providers to state-run Petroecuador.

“Given the continuously deteriorating operating terms, further exits by foreign players may be expected over the next few years,” BMI said.

BMI added, “Barring a drastic change of government, Ecuador's oil industry is set to become increasingly dominated by politically-driven national oil companies and smaller independents.”

Contact Eric Watkins at hippalus@yahoo.com.

Related Articles

PHMSA proposes pipeline accident notification regulations

07/02/2015 The US Pipeline and Hazardous Materials Safety Administration has proposed new federal oil and gas pipeline accident and notification regulations. ...

FourPoint Energy to acquire Anadarko basin assets from Chesapeake

07/02/2015 FourPoint Energy LLC, a privately owned Denver company, plans to acquire oil and gas assets from Chesapeake Energy Corp. subsidiaries Chesapeake Ex...

Puma Energy completes purchase of Murco’s UK refinery, terminals

07/02/2015 Singapore-based Puma Energy Group Pte. has completed its purchase of UK midstream and downstream assets from Murco Petroleum Ltd., a subsidiary of ...

BP to settle federal, state Deepwater Horizon claims for $18.7 billion

07/02/2015 BP Exploration & Production Inc. has agreed in principle to settle all federal and state claims arising from the 2010 Deepwater Horizon inciden...

MARKET WATCH: NYMEX oil prices plummet on crude inventory build, Iran deadline extension

07/02/2015 Oil prices plummeted more than $2/bbl July 1 to settle at a 2-month low on the New York market after a weekly government report showed the first ri...

API to issue recommended practice to address pipeline safety

07/01/2015 The American Petroleum Institute expects to issue a new recommended practice in another few weeks that addresses pipeline safety issues, but the tr...

Shell Midstream Partners takes interest in Poseidon oil pipeline

07/01/2015 Shell Midstream Partners LP has completed its acquisition of 36% equity interest in Poseidon Oil Pipeline Co. LLC from Equilon Enterprises LLC, a s...

MARKET WATCH: Oil prices decline as US crude inventories post first gain in 9 weeks

07/01/2015 Oil prices on July 1 surrendered much of their gains from the day before after the release of a government report showing the first rise in US crud...

FWS issues Shell letter of authorization on Chukchi Sea lease

07/01/2015 The US Fish & Wildlife Service issued Shell Gulf of Mexico Inc. a letter of authorization (LOA) related to the potential disturbance of polar b...
White Papers

UAS Integration for Infrastructure: More than Just Flying

Oil and gas companies recognize the benefits that the use of drones or unmanned aerial systems (UAS) c...

Solutions to Financial Distress Resulting from a Weak Oil and Gas Price Environment

The oil and gas industry is in the midst of a prolonged worldwide downturn in commodity prices. While ...
Sponsored by

2015 Global Engineering Information Management Solutions Competitive Strategy Innovation and Leadership Award

The Frost & Sullivan Best Practices Awards recognise companies in a variety of regional and global...
Sponsored by

Three Tips to Improve Safety in the Oil Field

Working oil fields will always be tough work with inherent risks. There’s no getting around that. Ther...
Sponsored by

Pipeline Integrity: Best Practices to Prevent, Detect, and Mitigate Commodity Releases

Commodity releases can have catastrophic consequences, so ensuring pipeline integrity is crucial for p...
Sponsored by

AVEVA’s Digital Asset Approach - Defining a new era of collaboration in capital projects and asset operations

There is constant, intensive change in the capital projects and asset life cycle management. New chall...
Sponsored by

Transforming the Oil and Gas Industry with EPPM

With budgets in the billions, timelines spanning years, and life cycles extending over decades, oil an...
Sponsored by

Asset Decommissioning in Oil & Gas: Transforming Business

Asset intensive organizations like Oil and Gas have their own industry specific challenges when it com...
Sponsored by
Available Webcasts


The Resilient Oilfield in the Internet of Things World

When Tue, Sep 22, 2015

As we hear about the hype surrounding the Internet of Things, the oil and gas industry is questioning what is different than what is already being done. What is new?  Using sensors and connecting devices is nothing new to our mode of business and in many ways the industry exemplifies many principles of an industrial internet of things. How does the Internet of Things impact the oil and gas industry?

Prolific instrumentation and automation digitized the industry and has changed the approach to business models calling for a systems led approach.  Resilient Systems have the ability to adapt to changing circumstances while maintaining their central purpose.  A resilient system, such as Maximo, allows an asset intensive organization to leverage connected devices by merging real-time asset information with other critical asset information and using that information to create a more agile organization.  

Join this webcast, sponsored by IBM, to learn how about Internet of Things capabilities and resilient systems are impacting the landscape of the oil and gas industry.

register:WEBCAST



On Demand

Taking the Headache out of Fuel License and Exemption Certificates: How to Ensure Compliance

Tue, Aug 25, 2015

This webinar, brought to you by Avalara, will detail the challenges of tax document management, as well as recommend solutions for fuel suppliers. You will learn:

-    Why it’s critical to track business partner licenses and exemption documents
-    The four key business challenges of ensuring tax compliance through document management
-    Best practice business processes to minimize exposure to tax errors

register:WEBCAST


Driving Growth and Efficiency with Deep Insights into Operational Data

Wed, Aug 19, 2015

Capitalizing on today’s momentum in Oil & Gas requires operational excellence based on a clear view of what your business data is telling you. Which is why nearly half* of oil and gas companies have deployed SAP HANA or have it on their roadmap.

Join SAP and Red Hat to learn more about using data to drive process improvements and identify new opportunities with the SAP HANA platform running on Red Hat Enterprise Linux. This webinar will also show how your choice of infrastructure impacts the performance of core business applications and your ability to achieve data-driven insights quickly and reliably.

*48% use SAP, http://go.sap.com/solution/industry/oil-gas.html

register:WEBCAST


OGJ's Midyear Forecast 2015

Fri, Jul 10, 2015

This webcast is to be presented by OGJ Editor Bob Tippee and Senior Economic Editor Conglin Xu.  They will summarize the Midyear Forecast projections in key categories, note important changes from January’s forecasts, and examine reasons for the adjustments.

register:WEBCAST


Emerson Micro Motion Videos

Careers at TOTAL

Careers at TOTAL - Videos

More than 600 job openings are now online, watch videos and learn more!

 

Click Here to Watch

Other Oil & Gas Industry Jobs

Search More Job Listings >>
Stay Connected