Ecuador unlikely to nationalize oil sector

QUITO (Reuters) – Although Ecuador seized control of Perenco’s oil fields over a tax dispute, the OPEC nation is unlikely to nationalize petroleum companies while it seeks to renegotiate contracts in a bid to increase revenue.

The leftist government of Rafael Correa, a key ally of Hugo Chavez, who has nationalized scores of energy companies as president of Venezuela, seized control of Perenco’s operations on Thursday.

But analysts and oil executives say the move does not signal a desire from Correa to tighten the state’s grip on the oil industry, the country’s biggest revenue earner.

“Correa is not looking for a wholesale nationalization of the oil sector. But he is showing, that when push comes to shove, he is willing to take over the assets of companies that do not go along with his government,” said Patrick Esteruelas, analyst at the Eurasia Group consultancy in New York.

Although close aides describe Correa as “stubborn” and unpredictable, they also say that he is pragmatic and unlikely to press foreign investors too hard, because he knows that the economy could suffer.

Reuters