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Ecuador gets new constitution, may see tighter state grip on oil
RIO DE JANEIRO
Petroleumworld.com, Sept 30, 2008Voters in Ecuador approved on Sunday a new constitution backed by leftist President Rafael Correa, handing him the ability to tighten state control over the oil sector and eventually run for another four-year term in 2010.
Several exit polls showed that between 65%-70% of Ecuador's voters approved the new constitution in Sunday voting. Official results were not yet available.
The new constitution will give more power to Correa to control Ecuador's economic and energy policies.
For instance, it gives Correa greater ability to set interest rates and control the energy sector, which is Ecuador's biggest source of exports, through state companies like PetroEcuador.
Ecuador, the newest addition to OPEC, produces around 500,000 b/d of crude, mostly for export. But since Correa took office in 2006, he has moved to boost the government's share of oil field revenues, temporarily imposing windfall taxes on oil earnings at rates as high as 99%, although this was later reduced to 70%.
He has also moved to take control over foreign-held oil properties, and said recently that Ecuador's government would take over an oil concession area in its Amazon Basin region known as Block 31 that is controlled by Brazil's Petrobras.
Following the referendum for the new constitution on Sunday, President Rafael Correa was reported in local media as saying Monday that he would not nationalize the country's oil sector, but would require oil companies to maintain or boost their planned investments in the country if they want to stay.
He also threatened to raise taxes on mining companies in the country.
Story from Platts
Platts 29 09 08Copyright© 2008 respective author or news agency. All rights reserved.
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