Make no mistake, this one is a big, big win for President Studmuffin and he'll reap both kudos and extra money for his country over this. I just hope he's read John Perkins' "Confessions of an Economic Hit Man"........
By Alonso Soto
QUITO, Nov 6 (Reuters) - Ecuador will keep its contract with Spain's Repsol (REP.MC: Quote, Profile, Research, Stock Buzz) after reaching an agreement over new terms, oil ministry sources said Thursday.
"Yesterday we reached an agreement with Repsol, they have accepted our terms," one senior ministry official told Reuters, asking not to be named because he was not allowed to speak on the matter. Two other ministry sources confirmed the deal.
Ecuador had said last week it planned to terminate the company's extraction contract because it could not reach a deal on terms more favorable to the state. But Repsol had said it hoped for an accord.
Ecuadorean President Rafael Correa had only recently said it was too late for the company to save its contract, but the leftist is known for his arm-twisting tactics with foreign companies to secure more benefits for the state.
Since he took office in 2007, Correa has launched an aggressive drive to renegotiate foreign oil and mining deal to exert more control over those key sectors of the OPEC nation's economy. He has threatened to expel other companies in the past.
The former economy minister wants oil companies to switch to new service deals that would allow the state to keep all the oil they produce in exchange for a set fee.
Oil Minister Derlis Palacios is expected to publicly sign a temporary participation-sharing contract with Repsol later on Thursday in hopes of switching to service deals in a year.
Ecuador has already signed temporary deals with the largest oil companies in Ecuador, including Brazil's Petrobras (PETR4.SA: Quote, Profile, Research, Stock Buzz) and China's Andes Petroleum.
The new deal would lower Repsol's overall tax burden in exchange for giving more of the oil it produces to the state, ministry officials said.
Repsol, one of the Andean country's largest investors, operates three oilfields in the Amazon jungle with a capacity to produce around 65,000 barrels per day. (Reporting by Alonso Soto in Quito; Editing by John Picinich)
Is Studmuffin's hardball finally working? (3 November)