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  HOME | Ecuador (Click here for more)

Ecuador's Correa Okays Seizure of Spain's Repsol YPF and France's Perenco Bank Accounts Over Unpaid Windfall Oil Taxes

QUITO -- Ecuador President Rafael Correa said Saturday his government will take measures to ensure two foreign oil companies operating in the Andean nation - Spain's Repsol-YPF and France's Perenco - pay pending windfall profit taxes.

"Since they haven't paid taxes on their windfall profits, I've ordered that coercive measures be taken against Repsol and Perenco," Correa said on his Saturday radio program.

Correa acknowledged his decision will cause friction with the governments of Spain and France, but said the measure - which, under Ecuadorian law, could include freezing the firms' bank accounts and other assets - was "unavoidable."

"We have to confront the abuses" and "either we change this country or I'd prefer to just go home," the leftist president said.

Correa recalled that in 2007 he issued an executive order establishing that 99 percent of windfall profits - earnings when prices climbed above those specified in their operating contracts - be paid to the Ecuadorian government.

The previous administration had decreed that 50 percent of windfall profits belonged to the state.

In the "four or five years of the extremely high oil prices, they didn't give us "one red cent" of those windfall earnings and filled their pockets," and that's why the "99 to 1" decree was issued, Correa said.

Some analysts and the oil companies' management considered that ratio excessive and sued Ecuador in international courts, although many of those cases have been thrown out, Correa said.

The president said that even if Repsol and Perenco take the matter of the windfall profit taxes to international courts Ecuador will "ignore extra-regional bodies that want to tell us what and what not to do."


He added that he will not accept the argument that the "99 to 1" decree is exaggerated.

"Open the box of profits; in the three or four years where the distribution was 100 to zero (in the companies favor) they took everything and gave us nothing."

"They're used to treating us like a colony and don't understand that that ended on Jan. 15, 2007," Correa said, referring to the date of he took office.

Correa's government last year threatened to boot Repsol from the country because the firm was balking at converting its drilling concessions into a services contract.

Repsol finally agreed to a one-year deal that is to be followed by a permanent pact.

Correa, a U.S.-educated economist, is insisting that foreign oil companies with drilling concessions in Ecuador shift to services contracts that keep ownership of the petroleum in state hands.

 

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