Ecuador's $290 mln Petrolia debt void on handover - gov't, company

New Stratus Energy

30/12/2022 24:22

By Alexandra Valencia
       QUITO, Dec 29 (Reuters) - Ecuador's $290 million debt to
a subsidiary of Canada's New Stratus Energy  NSE.V  will be void
once contracts for the operation of two oil production blocks
expire on Dec. 31, the government and subsidiary said on
Thursday.
    The subsidiary, Petrolia Ecuador, is obliged to return
blocks 16 and 67, in the Amazonian province of Orellana, after
President Guillermo Lasso refused negotiations to extend the
contracts and change their terms.
    New Stratus has said it will resort to international
arbitration, arguing Ecuador has breached contractual clauses by
not accepting direct negotiation.
    "The state owed the contractor, under unpaid tariffs, $290
million," the energy ministry said in a statement. "At the end
of the contract because of expiry, that debt is extinguished."
    Service provision contracts, such as the one that has
applied to Petrolia's blocks, oblige the government to pay the
operating companies a certain fee per barrel produced, though
the state can accumulate debt to them if oil prices are below a
certain amount.
    Ecuador has paid Petrolia some $60 million in fees over the
past two years, company manager Ramiro Paez told Reuters,
acknowledging the remaining $290 million debt would be wiped
when the contracts ended.
    The company has not yet presented its arbitration case
because it must complete a mediation process first, he added.
    "The hand-over is in process," Paez said. "We are paying off
workers, the majority of whom will be hired by Petroecuador ....
We are handing over equipment, materials and assets."
    State oil company Petroecuador will on Jan. 1 take over
operation of the blocks, which together produce about 14,000
barrels a day.
    The blocks will be assigned to a new private operator
through an international bidding process in the short term, the
ministry said, adding that it projected $150 million in annual
revenue from the blocks, based on a forecast for an oil price of
$64.8 per barrel in 2023.
 (Reporting by Alexandra Valencia; Writing by Julia Symmes Cobb;
Editing by Bradley Perrett)
 ((julia.cobb@thomsonreuters.com; +57-316-389-7187))