Ecuador will pay Brazilian state-controlled oil giant Petrobras $217 million in compensation for unilaterally ending an oil production contract, Non-Renewable Natural Resources Minister Wilson Pastor said.
The government had been negotiating since November 2010 with Petrobras, which had not accepted the new terms set by Ecuador for private companies wishing to continue operating in the country.
“We have reached an agreement on the amount and form of payment to Petrobras, which could become final in the next few weeks, we’re talking about the sum of 217 million (dollars) payable in two payments,” Pastor said.
Petrobras is the company seeking the largest amount of compensation because its oil production was 18,000 barrels per day (bpd).
A year ago, Ecuador paid $97 million to U.S.-based Noble Energy, which operated in the Andean country via its EDC Ecuador unit, the U.S. company said.
Ecuador is negotiating the liquidation of the holdings of South Korea’s Canada Grande and China National Petroleum Corp., or CNPC, both of which refused to accept the new operating terms.
Under the new contract terms, petroleum is the property of the Ecuadorian state, which pays private companies a fixed royalty per barrel of oil produced, allowing Ecuador to enjoy the full benefit of any rise in petroleum prices.
Chile’s Empresa Nacional del Petroleo, or ENAP, Italy’s Agip, China’s Andes Petroleum and Petroriental, and Spain’s Repsol all accepted the new operating conditions in November 2010 and remained in the country. EFE
NOTE: Excellent move, consistent with protecting the environment! Contrary to conventional "good" business, however this small country will be far wealthier in more meaningful ways rather than extracting resources while destroying the environment.
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