Ecuador said Thursday it has decided not to kick Repsol YPF out of the country after the oil company agreed to change the way it is paid
Ecuador said Thursday it has decided not to kick Spanish-Argentine Repsol YPF out of the country after the oil company agreed to change the way it is paid — allowing the government to keep a bigger share of oil income.
In negotiations set up by Spain's government, Repsol agreed to meet all Ecuador's conditions and sign a one-year transition contract in the next few days, Oil Minister Derlis Palacios told a news conference.
Last week, Palacios said Repsol's contract would be terminated because the company refused to accept Ecuador's demand that it be paid a fee for services rather than a share of oil produced.
Repsol's three oil operations produce an average of 50,000 barrels out of Ecuador's daily production of 500,000 barrels of crude.
In the transition contract, Ecuador will raise oil royalties on barrels sold by Repsol from 60 percent to at least 80 percent and lower the state's share of windfall oil profits from 99 percent to 70 percent. Windfall oil profits are earnings on oil sold above prices fixed in company contracts.
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Ecuador told five private oil companies in January they must switch to fee-for-services contracts. Only Brazil's state-run Petrobras and China's Andes Petroleum have signed transition contracts, which boost the government's share of oil income and give the two parties a window to continue negotiations.
Revenue from crude oil exports currently makes up 40 percent of Ecuador's national budget.
Repsol spokesman Kristian Rix confirmed that the company has agreed to the contract in principle and told The Associated Press in Spain that the terms are reasonable