Repsol seen shrugging off planned Ecuador chaRepsol seen shrugging off planned Ecuador changes
By Tom Bergin
LONDON, Nov 29 (Reuters) - Spanish oil major Repsol YPF (REP.MC: Quote, Profile, Research) is not expected to be hurt significantly by a proposal in Ecuador to renegotiate oil contracts but is likely to put any expansion in the Latin American country on hold.
Leftist Rafael Correa, the apparent winner of Ecuador's presidency, said on Tuesday he would renegotiate foreign oil contracts in order to more than quadruple the share of crude volumes received by the state.
Analysts have speculated that Ecuador could follow Bolivia's lead and nationalise its hydrocarbons industry.
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"This could spell another potentially negative impact to its (Repsol's) reserves and production base, although in reality the effect would be small," Citigroup said in a research note.
Repsol has already been forced to slash its Bolivian reserves and to pay higher taxes in Venezuela as a wave of resource nationalism spreads across Latin America.
Jason Kenney, an oil analyst at ING in Edinburgh, said he did not expect Repsol to increase its output in Ecuador as long as uncertainty over the terms remains.
"Obviously there's fiscal uncertainty, so I doubt they're going to invest until they've got clarity on that," Kenney said.
Repsol produces 15,000 barrels of oil per day in Ecuador and its proved reserves at the end of 2005 were 27.6 million barrels, according to the company's Web site.
Analysts said this amounted to only 1 percent of Repsol's total production and reserves. Repsol also operates 125 service stations in Ecuador, where fuel is sold under price controls, and sells liquefied petroleum gas.
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