Ecuador will receive an average of 60% of oil production for Block 18, operated by Brazilian giant Petrobras, up from the current 51%, Mining and Oil Minister Derlis Palacios said.
President Rafael Correa said over the weekend that Petrobras has agreed to sign a new temporary oil participation deal for Block 18. The temporary deal will be changed in one year to a service contract. Under the current participation contracts, the state receives a percentage of profits from oil production. Under the new service provider contracts, companies would be paid a production fee and be reimbursed for investment costs, although all of the recovered crude oil will belong to the state. Petrobras currently produces about 32,000 barrels of oil a day from Block 18, said a Dow Jones Newswire report. "According the agreement signed on Friday, the state will increase its participation in the block oil production to 60%. In exchange, the windfall tax for the company will be reduced from the current 99% to 70%," Palacios said. Palacios added that although the temporary contract is for a year, he hopes to sign a service contract quickly, "maybe in around three months" because it could benefit both the government and the company. Last month Ecuador and Petrobras agreed to finish the contract for Block 31, another block operated by the Brazilian company, and transfer it to the state. Block 31, with an area of 200,000-hectares, lies partly within Yasuni National Park, which the United Nations Educational, Scientific and Cultural Organisation have declared a World Biosphere Reserve. Petrobras has not started production in Block 31.
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