Offshore staff

(Ecuador)-The government of Ecuador has made revisions to a hydrocarbons law that was originally signed into law in April. The revisions are not good news for oil companies operating in the country.

The new law demands that 50% of the "excess profit" that an oil company earns in Ecuador be turned over to the government. Extra profit, or windfall profit, is defined as the extra profit oil companies have made from the margin between the average monthly free on-board price earned by contracting companies and the same average price as it applied on the day they signed contracts with the company.

Ecuador's Energy Minister Ivan Rodriguez said that the law, which originally called for oil companies to relinquish only 10% of their excess profits in the search for new reserves, was being revised in light of recommendations made by the country's Attorney General Jose Maria Borja and Administration Minister Jose Modesto Apolo.

Entrepreneurs in the country have criticized the revision, saying that the new law contained unconstitutional terms which they see as contrary to their business interests.

07/13/2006