Ecuador to renegotiate oil deals

People in the oil region want firms to invest more in local infrastructure

Ecuador's President Alfredo Palacio has pledged to revise all contracts with foreign oil companies to increase the state's share of the profits.

Mr Palacio said the present contracts were unfair - he wants Ecuador's share increased from 20% to at least 50%.

He said that he had already notified the oil firms of his plans.

Protesters from Ecuador's oil-rich Amazon region paralysed production last month, calling for more of the proceeds to be invested in their area.

The demonstrations came to an end after the government and the oil firms agreed to plough more money into health, education and infrastructure in the two main oil-producing provinces - Sucumbios and Orellana.

Companies from eight different countries - including the US, Spain, China and Brazil - operate in the Ecuadorean Amazon.

Ecuador is the biggest South American supplier of oil to the US after Venezuela and oil revenues account for about a third of the government's total income.

President Palacio took power in April, in what analysts have described as a congressional coup, after ex-President Lucio Gutierrez was driven from power by widespread protests.