UPDATE 3-Ecuador threatens to take over foreign oil firms

* Correa pushes for more state control over oil industry

* Says he has “lost patience” with oil contract talks
(Adds analyst comment, byline)

By Alexandra Valencia

QUITO, April 17 (BestGrowthStock) – Ecuador will move to take over
the operations of foreign oil companies in the country unless
they sign new contracts agreeing to increased state control
over the sector, President Rafael Correa said on Saturday.

The government wants foreign oil operators to give up
profit-sharing deals and sign new contracts under which they
would become service providers. But negotiations over the new
contracts are progressing slowly and Correa said his government
will propose legislation to force the issue.

The leftist president says OPEC-member Ecuador needs to
increase control over its own natural resources.

“Every day that passes there are millions of dollars going
to these companies that should be going to the Ecuadorean
state,” Correa said during a televised address.

“I’ve run out of patience,” he said. “We are sending a bill
to Congress that would allow for the expropriation of oil
fields if the companies not want to sign the new contracts.”

Spain’s Repsol (REP.MC: ), Brazil’s Petrobras (PETR4.SA: )
(PBR.N: ), Chinese consortium Andes Petroleum and Italy’s Eni
(ENI.MI: ) operate in the Andean country, despite Correa’s
ongoing spats with the private sector.

One analyst said Correa’s statement was a negotiating
tactic as talks reach a critical stage

“The government’s rhetoric is driven by its need to raise
revenue and reduce its deficits. But a nationalization of
private oil assets in Ecuador is probably not imminent,” said
Gary Kleiman, of Washington-based emerging markets consultancy
Kleiman International. “I think there is room to negotiate.”

Ecuador has been cut off from the international capital
markets since the government in 2008 defaulted on $3.2 billion
in bonds.

Correa has a troubled relationship with foreign investors.
He has sided with plaintiffs in the Amazon region of the
country who are suing U.S. oil company Chevron Corp (CVX.N: ) for
$27 billion in environmental damages.

He also threatened to nullify an arbitration ruling against
his government in its feud with the oil giant.

The push for state control over oil and minerals in Latin
America is being spearheaded by Venezuela’s socialist leader
Hugo Chavez. It remains politically potent in Bolivia as well.

Stock Matrket News

(Reporting by Alexandra Valencia; editing by Anthony Boadle)

UPDATE 3-Ecuador threatens to take over foreign oil firms