Months of tough bargaining between the Ecuador Government and the United States Texaco-Gulf consortium are over.
Months of tough bargaining between the Ecuador Government and the United States Texaco-Gulf consortium are over. On Monday (6 August) the two parties signed a new 18-point contract, which will be the basis for all future deals between the Government and foreign oil companies. The contract illustrates the steadily hardening attitude of the Government toward the companies, and increases the State's financial demands.
When the contract expires, in eight to ten years, all the company's fixed assets revert to the Ecuador Government -- and in the meantime, Texaco-Gulf has to pay a deposit to ensure that the equipment is in good condition when the State takes over. In addition, the State Oil Company has the right to purchase 25 per cent of the assets -- before the contract expires.
Texaco-Gulf has also agreed to invest at least $60 million (GBP 24 million) in the next three years. That is in addition to the $300 million (GBP 115 million) the company has spent since it began oil exploration work in Ecuador six years ago.
As for distribution of the crude oil: the company will be able to export 49 per cent, the remainder goes to the Ecuador Government. The State also takes 10 per cent of the net profit.
Ecuador began exporting crude oil last August -- the second Latin American country to do so, the first was Venezuela. In the first month, oil exports earned Ecuador $11 million (GBP 5 million).