QUITO (Dow Jones)--Ecuador President Rafael Correa said over the weekend that a new hydrocarbons bill is ready and will be sent to the National Assembly.
The bill will allow the government to speed the shift from production contracts to service contracts for oil companies operating in Ecuador.
"The reform for the hydrocarbons law is ready. It will be sent to the National Assembly," Correa said during his weekly media address.
Correa's administration wants to end the current production-sharing deals and replace them with service contracts that would see oil companies getting a production fee that includes a reimbursement for investment costs, while the government would own 100% of oil and gas produced.
According Correa, the government needs the legal changes to have the necessary instruments for the expropriation of private oil operations if companies refuse to sign new service-based contracts.
Last week in Lima, Correa said he hopes to finish negotiating new contracts with oil companies by the end of the year.
In Ecuador there are 34 contracts with various companies.
The shift will also include the so-called marginal fields, or low-production fields, and all types of contracts.
Government officials have said that the negotiations will give priority to eight contracts held by five companies: Italy's Eni SpA (E, ENI.MI), Spain's Repsol YPF SA, (REP, REP.MC) Brazil's state-run Petroleo Brasileiro S/A (PBR, PETR4.BR), China's Andes Petroleum Co., and PetroOriental de China.
The negotiations will take place separately with each company.
-By Mercedes Alvaro, Dow Jones Newswires; 5939-9728-653; mercedes.alvaro@dowjones.com
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