French oil firm Perenco leaving Ecuador

20th July 2009, Comments 0 comments

French oil company Perenco is abandoning its facilities in Ecuador amid a dispute with the country's government over alleged tax arrears, officials said.

Quito - French oil company Perenco is abandoning its facilities in Ecuador amid a dispute with the country's government over alleged tax arrears, officials said.

"Perenco has severed relations with the workers," said Wilson Pastor, manager of Petroamazonas, a subsidiary of Ecuador's state-owned oil company which will take over crude production.

According to Pastor, "Perenco is seeking to unilaterally terminate its contract" to extract oil.

The terms of the contract state that it will automatically be dissolved if operations are suspended for thirty consecutive days, he said.

A source with knowledge of the situation told AFP that the head of Perenco foresee's the company's departure from Ecuador in the next few days.

The French oil company extracts around 21,000 barrels of crude oil a day in Ecuador, which accounts for a little less than 10 percent of worldwide production.

Since coming to power in January 2007, left-leaning President Rafael Correa has questioned the terms of agreements between the government and foreign oil companies permitting crude extraction.

According to Correa, the distribution of profits from crude extraction in the country is unfair, and Ecuador's government has also accused Perenco of owing close to USD 330 million in back taxes.

In March, the government placed an embargo on 70 percent of Perenco-extracted oil, saying the seizure would pay for the company's overdue arrears.

Perenco said the measure was illegal and sought to have the issue brought before an international arbitration tribunal.

The manager of Petroamazonas denied Friday that the company's plan to continue production at Perenco facilities constituted "an expropriation."

AFP / Expatica

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