Ecuador to put New Stratus Energy blocks out to tender amid dispute

Ecuador will offer oil blocks currently operated by a subsidiary of Canada's New Stratus Energy in an international tender after the areas are returned to the state in late December, the energy minister said Thursday, amid a dispute with the company. New Stratus Energy and its subsidiary Petrolia Ecuador have called on Ecuadorean President Guillermo Lasso to begin direct negotiations to extend agreements for blocks 16 and 67, which expire on Dec. 31, and change the type of contract from provision of services to participation.

Ecuador will offer oil blocks currently operated by a subsidiary of Canada's New Stratus Energy in an international tender after the areas are returned to the state in late December, the energy minister said Thursday, amid a dispute with the company.

New Stratus Energy and its subsidiary Petrolia Ecuador have called on Ecuadorean President Guillermo Lasso to begin direct negotiations to extend agreements for blocks 16 and 67, which expire on Dec. 31, and change the type of contract from provision of services to participation. But Lasso has told the company that the blocks, which produce a combined 15,000 barrels per day (bpd), must be returned to the state by the end of the month, Energy Minister Fernando Santos told local news channel Ecuavisa.

"The State has no obligation to extend a contract if it is not through a bidding process," Santos said in an interview with the channel. "Giving a $2 billion asset that in three weeks will pass to the Ecuadorean people to a group of gentlemen, no matter how respectable they may be, is unethical, it is illegal." "We have told Petrolia that we are not going to extend (the contract), asking it to submit to a bidding process so that the blocks can be awarded in the most competitive, transparent and ethical manner," he added.

Following the Ecuadorean government's refusal to negotiate, the Canadian oil company said this week that it will resort to international arbitration, arguing that Ecuador has breached contractual clauses by not accepting a direct negotiation on its proposal. "Nowhere does it say that it is (Ecuador's) obligation to extend the contract, so I don't see any basis for this lawsuit," Santos said.

Petrolia Ecuador did not immediately respond to a request for comment. The minister said the fields will be operated temporarily by the state-owned oil company Petroecuador until the tender is announced.

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