End of contract: Petroecuador and CGC
Petroecuador and CGA to end contract
State-run Petroecuador and Argentine oil and gas company Compania General de Combustibles (CGC), are close to reaching an agreement to terminate an oil contract and allow CGC to exit Ecuador.
"In November CGC and Petroecuador signed a letter of understanding to end the contract. This process is underway. We have to complete the environmental analysis to be able to end the contract," Jaime Regalado, head of Petroecuador's contracts unit, told reporters today.
CGC was awarded an exploration license in 1996 for the 200,000-hectare block 23, in the province of Pastaza, in the Amazon region, Dow Jones Newswire reported.
CGC has a 50% share in Block 23 and Burlington Resources the other 50%.
Native groups in the area have refused to allow CGC to drill. In January 2003, the Sarayaku native group took workers hostage.
Last March, the company filed a claim against Ecuador with the International Centre for Settlement of Investment Disputes (ICSID), in a bid to recover losses on its project for not being able to develop the block.
According the last official data from the company, it has invested around $30 million in Ecuador.
The Block 23 has up to 200 million barrels of possible oil reserves.
Petroecuador's Regalado said that, in November, Burlington Resources also asked the government to negotiate the termination of the contract.
Burlington also has an exploration license in oil Block 24, and native groups in the area have refused to allow drilling.
No one was available at CGC or Burlington for comment today.