Ecuador court upholds new oil law

Ecuador's top court has rejected a challenge filed against a law forcing foreign oil companies to hand the state part of the revenue they gain from high oil prices.

    Palacio: Ecuador has the right to a greater share of oil revenue

    Ecuador, South America's fifth largest oil producer, approved in April an oil law that obliges companies to hand over at least 50% of their oil revenue above a benchmark price agreed in their original contracts.

    Tuesday's court ruling was a boost to Ecuador's efforts to secure more benefit from its energy industry as it joins Venezuela and Bolivia in introducing tighter controls over profits from natural resources.
      
    Maria Fernanda Encalada, the court spokeswoman, told Reuters: "The tribunal decided unanimously to reject the claim."

    Ecuador's Constitutional court ruled to upheld the legality of the law after local business groups filed the claim arguing the legislation violates international agreements and the country's constitution.
      
    Analysts have said the new law may curtail future investment in Ecuador's key oil sector. Companies that could be affected by the law includes Spain's Repsol-YPF and Brazil's Petrobras.

    Alfredo Palacio, the Ecuadorian president, aggressively lobbied for the law, arguing the country has the right to get a bigger share of foreign companies record high profits amid soaring oil prices.

    The law is expected to generate about $255 million this year alone for Ecuador.

     

    SOURCE: Reuters


    YOU MIGHT ALSO LIKE

    Holding onto Hoxha: Guarding the last statue of communist Albania

    Holding onto Hoxha: Guarding the last statue of communist Albania

    In the basement of an old museum in a village in Albania, a 78-year-old woman protects the last remnant of a dictator.

    Still Here: A story of incarceration and gentrification in the US

    Still Here: A story of incarceration and gentrification in the US

    Many formerly imprisoned women of colour return to neighbourhoods transformed beyond recognition. What awaits them?

    The 'risky business' of tracking Rwandan fugitive Felicien Kabuga

    The 'risky business' of tracking Rwandan fugitive Felicien Kabuga

    The former chief prosecutor at the International Criminal Tribunal for Rwanda discusses the hunt for genocide suspects.