Ecuador To Continue With Perenco Oil Auction

Published: 15-May-2009

By: Staff Writer Staff Writer Staff Writer

Ecuador will proceed with the sale of 1.4 million barrels of crude seized from Perenco in spite of a foreign court order to stop the sale that stems from a tax row. Petroecuador, will auction the crude on May 15, 2009 to begin gathering above $300 million owed by Perenco over a controversial windfall tax. Ecuador seized part of Perenco's production in March 2009 after the government was unsuccessful to reach an agreement with the company to settle the awaiting debt.

Perenco launched a worldwide suit against Ecuador and Petroecuador, in 2008 to dispute the legality of the windfall tax it argues breaches its contract.

Alexis Mera, the government's top legal adviser, said the government was going to execute the auction in spite of a World Bank tribunal order to abandon the sale until it decides on the legality of the windfall tax. The auction will be carried out tomorrow because the auction process had already started, Mera said. We still strive to reach an agreement with Perenco.

Ecuador increased the windfall tax to 99% from 50% in 2007 as a way to pressure foreign oil firms to rework their extraction contracts. Ecuador later decreased the tax to 70%.

Most firms have agreed to pay late taxes and discuss a new service contract in which the state would keep all the oil they pump in exchange for an extraction fee.

Perenco extracts about 27,000 barrels a day from the Coca-Payamino oilfield and blocks 7 and 21 in Ecuador's Amazon jungle.