Business | Oil & Gas
Ecuador open to private oil investment
Ecuador's week-old leftist government has said it was open to private energy investment despite plans to review oil contracts amid a wave of resource nationalism in allied Venezuela and Bolivia.
- Reuters
- Published: 00:00 January 21, 2007
Quito: Ecuador's week-old leftist government has said it was open to private energy investment despite plans to review oil contracts amid a wave of resource nationalism in allied Venezuela and Bolivia.
President Rafael Correa, a friend of Venezuela's socialist leader Hugo Chavez, has pledged to fight poverty in a radical four-year term by rewriting energy deals, foreign debt accords and the constitution of the unstable, oil-exporting nation.
Ecuador's finance minister said authorities have discussed possible loans from Venezuela for up to $1 billion, which could further cement Ecuador's ties to Latin America's harshest critic of Washington-backed, free-market reforms.
But in remarks that may ease some investor fears, Energy Minister Alberto Acosta said the Correa administration would not apply nationalisation policies to Ecuador's oil fields and he welcomed private investment in electricity generation.
"We are not proposing a statist line," Acosta said at a news conference, adding the planned review of oil contracts would be "friendly".
He ruled out auctioning oilfields formerly run by US-based Occidental Petroleum Corp, which is requesting $1 billion in damages after Ecuador seized its operations over a contract dispute last year.
But Ecuador plans to hold bidding rounds for oilfields and offshore natural gas blocks, he said.
Still, he also said the Andean country was seeking to join the Organisation of Petroleum Exporting Countries (Opec) and mulling electricity subsidies for Ecuador's poor majority, reflecting the populist ideas that helped catapult Correa into office.
The minister's statements showed a more moderate tone than the government's tough stance on foreign debt payments.
A Wall Street report released on Thursday showed Ecuador could refuse to pay back large portions of its debt - sending Ecuadorean bonds tumbling 10 per cent on default fears.
On Friday, the ratings agency Standard & Poor's cut credit ratings of Ecuador's debt on concerns that it may not pay its debt service in a timely manner, warning that aggressive debt restructuring could constitute a default.
But Finance Minister Ricardo Patino said the massive $1 billion in loans from Venezuela would improve Ecuador's cash flow situation. That could give the government more resources to pay debt - but also draw Correa closer to the increasingly radical Chavez.
Despite lacking support from a main political party, Correa won a surprisingly strong mandate to create a 'constituent assembly' that he wants to change the constitution and reduce the power of Congress.
Venezuela's Chavez and Bolivian President Evo Morales have both created constituent assemblies as part of efforts to consolidate power and push forward their leftist reforms.
Correa, a US-trained economist who is Ecua-dor's eighth president in a decade, has quickly joined this South American leftist vanguard.
Ceremonies for his inauguration were dominated by Morales, who last year nationalised gas fields, and Chavez, who has extended his nationalisation drive this year with moves against private oil and electricity companies.
Acosta made clear the foreign investment climate had also changed in Ecuador even if the policies he announced were moderate.
"Foreign investment is important, but you cannot organise everything for the sake of foreign investment just like you cannot organise everything for the sake of debt payments," he said.
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