RIO DE JANEIRO (Dow Jones)--Brazilian state-run energy giant Petroleo Brasileiro (PBR) declined to comment Monday on Ecuador's threat to expropriate assets held by foreign oil companies.
Petrobras operates the Block 18 oil concession in the Andean nation, producing about 30,000 barrels of oil a day.
Ecuadorian President Rafael Correa said Saturday that his government will submit legislation to expropriate private oil operations if the companies to refuse to sign new service-based contracts.
In October 2008, Petrobras signed a memorandum of understanding to extend its production contract. The MOU was designed to give Petrobras and Ecuador's government time to negotiate a new contract or a return of the block.
If Petrobras returns the block, the company said at the time that it would seek compensation for the non-depreciated portion of its investments in the block. At the time, Petrobras said it would not accept a service contract with Ecuador's government.
Petrobras declined to comment Monday on whether the two parties had reached a deal since signing the memorandum.
Under terms of the memorandum, Ecuador received 60% of oil production from the block, up from the previous 51% share.
Petrobras previously returned the Block 31 to the Ecuadorian government because it didn't like the government's proposed changes to the concession.
-By Jeff Fick, Dow Jones Newswires; 55-21-2586-6085; jeff.fick@dowjones.com
(Mercedes Alvaro in Quito contributed to this article.)
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