Perenco launched a worldwide suit against Ecuador and Petroecuador, in 2008 to dispute the legality of the windfall tax it argues breaches its contract.
Alexis Mera, the government’s top legal adviser, said the government was going to execute the auction in spite of a World Bank tribunal order to abandon the sale until it decides on the legality of the windfall tax. The auction will be carried out tomorrow because the auction process had already started, Mera said. We still strive to reach an agreement with Perenco.
Ecuador increased the windfall tax to 99% from 50% in 2007 as a way to pressure foreign oil firms to rework their extraction contracts. Ecuador later decreased the tax to 70%.
Most firms have agreed to pay late taxes and discuss a new service contract in which the state would keep all the oil they pump in exchange for an extraction fee.
Perenco extracts about 27,000 barrels a day from the Coca-Payamino oilfield and blocks 7 and 21 in Ecuador’s Amazon jungle.
