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Last Updated: Friday, 5 October 2007, 04:39 GMT 05:39 UK
Ecuador issues foreign oil decree
By Daniel Schweimler
South America correspondent, BBC News

Ecuador's President Rafael Correa
Ecuador denies that it is planning to nationalise oil companies
Ecuadorean President Rafael Correa has signed a decree giving the state a greater share of profits from foreign oil companies working in his country.

He said the 50% of windfall oil profits stipulated in a law passed last year was not enough, and the state should now receive 99%.

It is one of the radical reforms promised by Mr Correa to spread Ecuador's wealth to the country's poor.

But the size and timing of this latest move took many by surprise.

It will worry foreign investors and oil companies which operate in Ecuador.

Windfall profits are made whenever prices on international oil markets exceed prices established in existing contracts.

Venezuelan model?

The foreign oil companies complained in 2006 when it was agreed that all such profits should be split 50-50 with the state.

But now Mr Correa says the state is not getting enough and will now take 99%.

His decree said revenues should be distributed in a more just way.

Critics have accused the Ecuadorean government of copying radical measures introduced in Venezuela by President Hugo Chavez.

But Ecuador's Oil Minister, Galo Chiriboga, said the government was not nationalising anything.

Among the foreign companies operating in Ecuador are Brazil's Petrobras, Perenco of France and the Spanish-Argentine company Repsol YPF.

They help to produce more than 500,000 barrels of crude oil a day - a major contribution to Ecuador's economy.

SEE ALSO
Ecuador seeks oil 'compensation'
21 Sep 07 |  Americas
Ecuador 'expels World Bank envoy'
26 Apr 07 |  Americas
Timeline: Ecuador
22 Aug 07 |  Country profiles
Country profile: Ecuador
22 Aug 07 |  Country profiles
Profile: Ecuador's Rafael Correa
27 Nov 06 |  Americas



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