Communism at work...poverty to follow

Ecuador warned over oilfield seizures
Monday, July 20, 2009-->Web posted at: 7/20/2009 0:11:9Source ::: FINANCIAL TIMES
By Naomi Mapstone
Ecuador’s seizure of two oil concessions operated by Perenco exposes the state to “billions” of dollars in compensation claims, Rodrigo Marquez, head of the group’s Latin American division, said yesterday. PetroEcuador, the state oil company, took control of the Perencotwo concessions in the north-eastern Amazon region on Thursday. Perenco had warned it was about to halt production following Ecuador’s refusal to comply with a an international arbitration body’s ruling in a tax dispute.
“We’ve been expelled and our assets have been taken over,” Marquez told the Financial Times. “They are trying to say they did not really take over the facilities because they did not send the army in, but before we were due to start the suspension of activities government officials went in . . . and started to persuade the employees not to carry out their instructions. You would appreciate that an employee caught in that situation would feel somewhat intimidated,” he said.
Luis Jaramillo, president of PetroEcuador, which is now operating the concessions, denied there had been a takeover. “We have not militarised these fields,” he told Reuters. “We have had a dialogue with the workers and we have told them that if they stop production they would affect the national economy.” The French group’s tax dispute with Ecuador began in October 2007, when the country increased the windfall tax on oil from 50 percent to 99 percent. Although it later reset the tax at 70 percent, Perenco and its minority partner, Burlington Resources, a subsidiary of Conoco-Philips, took the dispute to a World Bank arbitrator, the International Centre for Settlement of Investment Disputes (Icsid).
Rafael Correa, Ecuador’s leftist president and an ally of Hugo Chávez, Venezuela’s leader, is trying to boost state revenue from the sector but has avoided nationalising oil companies.
His government has seized the bulk of Perenco’s production since March in an effort to collect more than $350m (€248m, £214m) it says the company owes in windfall taxes. In May, Icsid ordered Ecuador to stop expropriating oil from the concessions, but the Opec nation refused to comply, saying the state had the right to recover its tax debt. Ecuador has now pulled out of its membership of Icsid. While foreign operators such as Repsol, Andes Petroleum and Petrobras have largely accommodated Mr Correa’s escalating demands for revenue sharing and control, Perenco is bucking the trend, said Ramiro Crespo of Quito-based Analytica Securities.