Paris warns Quito over Perenco oil field takeover

21st July 2009, Comments 0 comments

France warned Ecuador on that its decision to take control of two oil concessions could jeopardise foreign investment in the country.

Paris – France warned Ecuador on Monday that its decision to take control of two oil concessions operated by French oil group Perenco could jeopardise foreign investment in the country.

Perenco suspended oil production in Ecuador last week in a long-running tax dispute that has seen Quito seize 70 percent of its output since March.

Ecuadoran officials said Saturday that Perenco was abandoning its facilities and that a branch of the state-owned oil company Petroamazonas would take over crude production.

"Quito's decision is not likely to draw foreign investment to Ecuador, nor to create the business climate suitable for developing economic and trade ties that France hopes for," said foreign ministry spokesman Frederic Desagneaux.

Desagneaux noted that Perenco and its minority partner, Britain's Burlington Resources, had taken the dispute to a World Bank arbitrator, the International Centre for Settlement of Investment Disputes (ICSID).

In May, the arbitrator ordered Ecuador to stop expropriating oil from Perenco's concessions.

The OPEC nation, which says Perenco owes it (EUR 230 million) USD 327 million in tax arrears, refused to comply and has since moved to withdraw from ICSID.

Desagneaux said that Paris "regrets" that the Ecuadoran authorities did not apply the arbitator's decision.

"We hope for the resumption of dialogue between the oil group Perenco and the Ecuadoran authorities, as well as the respect of the rights of the Franco-British company," he added.

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.

In June, Ecuador's president threatened to expel foreign oil firms that launch legal challenges against his government.

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.

AFP / Expatica

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