New Stratus Energy Ecuador unit seeks negotiation with government
02/12/2022 24:23
By Alexandra Valencia
QUITO, Dec 1 (Reuters) - Petrolia Ecuador S.A, a
subsidiary of Canadian energy company New Stratus Energy
NSE.V , hopes to hold negotiations with Ecuador regarding its
continued operation of two blocks in the Amazon, which would
avoid international arbitrage, general manager Ramiro Paez said
on Thursday.
The company notified Ecuadorean authorities last week that
it will enter a legal dispute over contracts for blocks 16 and
67 in Orellana province, which together produce 15,000 barrels
of oil per day (bpd), citing the state's breaching of the
agreements.
Current contracts expire this month and the company wants to
reach an agreement to extend them by 15 years and convert them
to participatory contracts, rather than service contracts.
"If 30 days pass after attempting direct negotiation,
resulting in no contract, and without sitting at a table to
renegotiate (terms), a process of international arbitration
could begin," Paez said in an interview with Reuters.
Ecuador has failed to comply with existing contracts after
non-payment of $15 million of debt over tax adjustments and
suspending talks regarding contract changes, the company says.
The energy ministry did not immediately comment on the legal
dispute, but has previously said it has begun a process of
revising blocks in the hands of the state.
Authorities have said Petrolia's request to extend the
contracts came after the deadline.
The South American country started the year with a process
so that oil companies could switch service contracts - where
companies are paid for operating fields - to participation
contracts, in which businesses can benefit from a slice of the
production earnings, in a bid to attract investment.
If Petrolia is granted a participation contract, it is ready
to invest some $200 million in the first two years to boost
production to around 23,000 bpd, Paez said.
"We're concerned that, being close to the end of our
contract, we aren't able to demonstrate that we wish to invest,"
he added.
(Reporting by Alexandra Valencia; Writing by Oliver Griffin;
Editing by Stephen Coates)
((Oliver.Griffin@thomsonreuters.com; +57 304-583-8931;))