The state-run South American player could instead partner with China National Petroleum Corporation, the Wall Street Journal reported.
Pedro Merizalde, Ecuador's minister of non-renewable natural resources, told the newspaper on Monday that Petroamazonas and the state-owned Chinese entity are in talks to develop Block 20.
"They (CNPC) are interested. According to the current law we can negotiate directly, but they should provide a pilot plan to look at the feasibility of the development," Merizalde was quoted as saying, adding that formal negotiations had not started. "We've only had talks."
Ivanhoe and Petroamazonas signed an agreement in 2008 to explore Block 20, a 426-square-mile tract located about 125 miles south-east of Quito, Napo province. It includes the 250-square-mile Pungarayacu heavy-oil field, discovered more than three decades ago.
The contract covered project appraisal and the development of the block, including construction of a $500 million upgrader.
However, Ivanhoe's analysis of data suggests the block would need additional exploration work before it could be developed. The original contract does not allow for more exploration.
An Ivanhoe spokesperson was not available for comment on Monday.
Merizalde told the Journal that Ivanhoe may be interested in a joint venture with CNPC, "but that decision is exclusively from Ivanhoe".