Foreign Investments in Ecuador Safe, Oil Chief Says (Update2)
By Bill Faries
Dec. 5 (Bloomberg) -- Carlos Pareja, tapped to lead state- owned PetroEcuador, said his country's legal dispute with Occidental Petroleum Corp. isn't indicative of how the incoming government will work with foreign oil and natural-gas companies.
Occidental says it will seek more than $1 billion in damages after the company's rights to pump oil from a field in Ecuador's Amazon region were canceled in May. Pareja, who will become the head of PetroEcuador after president-elect Rafael Correa takes office in January, said the country's actions were legal and it won't negotiate with Occidental over its demands.
Ecuador said Occidental failed to obtain government approval to transfer part of an oil block to Canada's EnCana Corp. in 2000. Los Angeles based Occidental said it complied with the contract.
``The world has been poorly informed about the situation with Occidental,'' Pareja said today during an interview in Buenos Aires. ``Foreign investments in Ecuador are secure.''
PetroEcuador produces about 40 percent of Ecuador's daily output of approximately 530,000 barrels. Pareja said production has fallen by 25,000 barrels a day over the past year and that without improvements to the country's refineries, output might by another 10,000 barrels a day in 2007.
Occidental spokeswoman Jan Sieving said by phone from Los Angeles that the company doesn't comment on issues involving Ecuador.
OPEC Membership
Pareja was PetroEcuador's president for two months in 2005 before resigning after he urged the government to cancel Occidental's contract to operate the Block 15 field in the Amazon. The field produces about 90,000 barrels of oil a day.
Pareja said his priorities as president will be to improve PetroEcuador's refining capacity and stabilize production. Ecuador may apply for membership in the Organization of Petroleum Exporting Countries next year after the government completes a study of the issue, Pareja said, without indicating when the study would be finished.
To contact the reporter on this story: Bill Faries in Buenos Aires at wfaries@bloomberg.net .
Last Updated: December 5, 2006 15:34 EST
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