Quito and Petrobras agree on stop-gap PSC

Ecuador signed a temporary production sharing contract with Brazil's Petrobras that lowers the company's tax burden, President Rafael Correa said.

The PSC with Petrobras gives Correa more time to negotiate service deals that would allow the state to keep all the oil that companies produce. It also eases tensions with ally Brazil over recent threats to nationalize the company's oilfields if a deal was not signed. "Yes, Petrobras has agreed," said Correa. "These transition contracts will lead to service deals in about a year." Ecuador's ties with Brazil frayed after Correa ejected Brazilian construction outfit Odebrecht over a disputed dam in September. Correa, who won a September referendum to increase his control over the economy, has struggled for nearly a year to convince foreign companies to renegotiate deals that allowed them to directly sell some of the oil they extracted in Ecuador. Protracted talks has slashed private investment in the country's oil sector, which is crucial for the state's finances. Correa said French oil company Perenco also agreed to the temporary deal that immediately lowers a windfall tax that companies have said made their business unprofitable in the Andean country. Spain's Repsol is also planning to ink the transition deal next week, Correa said.
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