Eric Watkins
Senior Correspondent
LOS ANGELES, Oct. 5 -- Ecuador's President Rafael Correa has signed a decree requiring foreign oil firms with operations in his country to pay the treasury 90% of their profits resulting from the rise in global crude prices and not 99%, as earlier stated by official sources.
There was no explanation regarding the change from earlier reports that quoted Correa as saying that by a new decree "it is established that 99% of the windfall oil profits will go to the state and the remaining 1% to companies."
Under a law passed last year, oil companies and the Ecuadorean government each received 50% of profits whenever prices on international oil markets exceeded prices established in existing contracts.
Correa said last year's law had to be changed, however, because "it's not enough for Ecuador to get 50%," as in the past. He said the new law puts an end to "the distribution system by which for every 100 bbl of oil, the country (Ecuador) would only keep between 46 and 48 bbl."
According to Correa's decree, "It's the state's fundamental right to defend the country's natural patrimony and preserve the economy's sustainable growth."
The new regulation comes as Ecuador is renegotiating contracts with foreign oil companies, including Petroleo Brasileiro SA, Repsol-YPF SA, and Perenco SA.
Ecuador produces 530,000 b/d of oil. Of that total, 363,000 b/d comes from private oil companies, while the remainder is produced by state oil company Petroecuador.
Contact Eric Watkins at [email protected].
