UPDATE 3-Ecuador’s Correa threatens oil nationalizations

* Correa wants oil firms to sign contracts favoring govt

* Nationalization threat may be tactic to speed up talks
(Updates with oil minister replacement, paragraph 7)

By Alexandra Valencia

QUITO, April 20 (BestGrowthStock) – Ecuador’s President Rafael
Correa on Tuesday threatened to nationalize foreign oil
operations unless companies sign contracts boosting state
control in the sector.

It is the latest tussle with private investors by Correa,
the leftist leader who shocked markets with a $3.2 billion bond
default in 2008 and also has tightened government control of
mining.

“I am preparing a law to facilitate expropriation and
nationalizations,” Correa told cable news network Telesur in a
interview shown on Tuesday. “With this instrument we will do
what we have to in the right moment.”

Leaders in other Latin American nations have pushed for
more state control over natural resources since Venezuela’s
socialist leader Hugo Chavez in 2007 nationalized
multibillion-dollar oil projects and pushed ExxonMobil (XOM.N: )
and ConocoPhillips (COP.N: ) out of the country.

Correa had said at the weekend that the law would allow the
government of the OPEC nation to take over oil operations but
did not mention permanent nationalizations [ID:nN17142978].

The president on Tuesday also accepted the resignation of
his minister in charge of energy and current OPEC President,
Germanico Pinto, and his finance minister Elsa Viteri, as part
of a reshuffle of his government, now in its fourth year, a
ministry advisor and a government source said.

Pinto would may be replaced by Wilson Pastor, head of
state-run Petroamazonas, the advisor said.

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.

“Expropriation does not mean confiscation. Confiscation
means to take by force without the correct compensation. Here
we will compensate them economically, but if they don’t want to
adapt to the terms of the country, then let them go, we don’t
need them,” Correa said in the interview recorded on Monday.
(^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^: )

For a Q+A on Ecuador’s oil sector click: [ID:nN20143327]
(^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^: )

A European-trained economist and leftist, Correa has so far
shied away from outright nationalizations, but shook up the
nation’s mining law to strengthen environmental laws and
government control over silver, gold and copper projects.

He shocked markets in 2008 by defaulting on $3.2 billion of
global bonds, arguing they had been negotiated and issued
illegally during previous administrations.

The government wants foreign oil operators to give up
profit-sharing deals and sign new contracts under which they
would become service providers. Talks over the new contracts,
which were announced two years ago, are progressing slowly and
some say Correa’s tough stance could be a negotiating tactic.

“The companies that have decided to stay in the country
have stayed, and they are waiting to negotiate these contracts.
They are ready to migrate to the contract and keep operating,”
the president of the Ecuador’s Industrial Association of
Hydrocarbons, Jose Luis Zirrit told Reuters.

Zirrit said the companies were waiting for the government
to negotiate. Several companies have suspended investment in
Ecuador while the talks proceed, triggering a drop in output in
the smallest member of OPEC.

In Ecuador, Correa’s popularity ratings have slipped from
over 70 percent to below 50 percent in the last 12 months
because of a deep recession in his oil-producing country.

Stocks

(Reporting by Alexandra Valencia; Writing by Frank Jack
Daniel; Editing by David Gregorio and Patrick Markey)

UPDATE 3-Ecuador’s Correa threatens oil nationalizations