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President Correa's oil policies will result in more disputes with foreign companies and reduced oil production, experts predict.


Ecuadorian president Rafael Correa, inspired by policies in Venezuela, is aggressively attacking foreign oil companies in a gamble that likely will lead to further falls in oil output from Latin America's fifth-largest oil producing country. Foreign oil companies account for half of Ecuador's oil production, while state oil company Petroecuador continues to be plagued by mismanagement and a heavy debt burden.

"The changes implemented by the Correa administration will constrain the ability of Ecuador to lure foreign investors into the country," Bear Stearns analyst Alberto Bernal said in commentary Friday.


The new policies will also lead to more formal disputes, risk consultancy Exclusive Analysis warns.  "President Correa's moves to increase state control over the oil industry will likely lead to more litigation with multinationals," Exclusive Analysis said in a commentary late last week.

The latest hike comes after the then-government of president Alfredo Palacio raised the government's share from 30 to 50 percent in April last year.  Several oil companies are still in arrears on those hikes, the government says. All in all, they owe $317 million, which they have to pay the next two weeks - October 31 - or face sanctions, officials warned yesterday.

Spanish oil giant Repsol YPF, French-owned Perenco and Chinese-owned Andes...

Keywords: BP Statistical Review of World Energy, Chevron, City Oriente, International Center for Settlement of Investment Disputes,
Occidental Petroleum, Petrobras

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