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Ecuador urges crackdown on foreign oil companies

Ecuador's president swore in a new energy minister on Monday, urging him to crack down on several foreign oil companies at the center of an international dispute over allegedly unpaid taxes on windfall oil income.
/ Source: The Associated Press

Ecuador's president swore in a new energy minister on Monday, urging him to crack down on several foreign oil companies at the center of an international dispute over allegedly unpaid taxes on windfall oil income.

"We're going to radicalize our citizens' revolution ... and that radicalization implies demanding respect," President Rafael Correa said at a swearing-in ceremony for Oil Minister Germanico Pinto. "Germanico will take a much firmer approach toward all these companies that think they can still keep abusing the country."

Paris-based oil company Perenco SA has refused to pay $338 million that Ecuador says it has been owed since boosting taxes on windfall oil earnings to 99 percent in 2007. The government has seized 70 percent of Perenco's output since March to pay down the debt.

Perenco says the new taxes violate its existing contract and has taken its case to the International Center for Settlement of Investment Disputes, a World Bank body. Madrid-based Repsol YPF reached a temporary deal to pay Ecuador the new taxes, but is still pressing a separate claim with the same panel in Washington D.C.

Occidental Petroleum Corp. is meanwhile seeking $1 billion in compensation for fields seized by Ecuador's government in 2006, when Correa's predecessor accused the Los Angeles-based energy company of violating its operating terms.

"They refuse to pay taxes, and on top of that, they take us to arbitration and press charges against us seeking millions," Correa said of the companies on Monday. "If that's what they think they deserve, then they should leave the country."

Incoming oil minister Pinto has been a congressman and sub-secretary in the Ministry for Strategic Sector Coordination. He is expected to lead the push to boost the state's share of oil production in ongoing contract talks with foreign oil companies which also include Petrolero Brasileiro SA and Andes Petroleum.

Pinto's new post is key in Ecuador, a member of the Organization of the Petroleum Exporting Countries that relies on crude as its top export and source of some 30 percent of its federal budget.

Correa, who took office in January 2007 and was re-elected on April 26, began a series of cabinet changes last week. He has so far also named new ministers of production, social development and civic participation.