QUITO – The Ecuadorian government said Friday that it started the process of canceling its contract with U.S.-based Energy Development Corporation over non-compliance with investment obligations at a field in the Gulf of Guayaquil.
The Non-Renewable Natural Resources Ministry said it agreed to a formal request from state oil company Petroecuador and has given EDC two months to comply with its annual budget or provide proof it has fulfilled the terms of its contract.
The ministry said Jan. 7 that Petroecuador asked it to cancel EDC’s gas exploration and production contract over the firm’s failure to make agreed-upon investments in Campo Amistad, a gas field in the Gulf of Guayaquil.
In a statement, the ministry said it has begun the cancellation process and that, in accordance with the law, “has granted (EDC) 60 days to comply with its unfulfilled obligations” or successfully dispute the accusations.
EDC signed a contract in July 1996 to operate the coastal Block 3, which includes the Amistad field; it went into effect for a period of 25 years beginning in 2001, when the company began gas production activities.
The National Hydrocarbons Directorate, which oversees oil and gas operations in Ecuador, says EDC produces 28.4 million cubic feet of natural gas per day from a reserve estimated to contain 200 billion cubic feet of gas.
Ecuador’s leftist government instituted so-called “coactiva” proceedings against Anglo-French oil company Perenco last year to enforce payment of some $327 million in alleged unpaid debt.
Ecuador in 2006 also decided to cancel a contract with Occidental Petroleum for a block in the Amazon region, accusing the California-based firm of transferring 40 percent of its stake to Canada’s Encana without authorization. EFE