Rift with Oil Companies Could Hurt Ecuador

An extended stand off over a new service contract between the Ecuador government and foreign oil companies could translate into a freezing of investment and a decline in output revenue, according to Analytica Investments. “The state owned company is not doing what it takes to maintain production levels,” says Eduardo Checa, analyst at the Ecuador-based shop. Even though oil income is sinking due to a lack of investment, and remittances from the US and Spain have dwindled, high commodity prices maintain decent local liquidity, the analyst adds. Ecuadorian oil minister Chalo Chiriboga announced this week that the government expects foreign oil companies to move to a new service contract scheme by September.