Quito says companies agree to deals

Ecuadorean President Rafael Correa has said most foreign companies that filed lawsuits against the government over an oil tax have reached out of court settlements, which should help revive stalled oil production.

On Thursday, Ecuador offered companies a tax cut for one year if they agreed to drop lawsuits filed over a tax that forces them to share nearly all their extra revenues with the state.

"Most of the companies have said yes" to the offer, Correa said during his weekly radio address. "But in one year, they will have to sign service deals ... that's the condition."

Ecuador wants companies to switch from contracts in which they keep part of the oil they extract to deals that would allow the state to keep all the oil in exchange for a service fee, in a move to boost government control over the key sector, Reuters reported.

No company was immediately available for comment.

Ecuadorean Oil Minister Galo Chiriboga said the government will negotiate a new service contract model with companies during the year.

Companies claimed the windfall tax hurt their businesses, so they slashed investment, which stalled private output key to the oil-producing nation. Meanwhile the country's state company, Petroecuador, is struggling to lift state output.

Correa, a former economy minister who took office last year, is reworking contracts in important sectors of the economy like oil, mining and telecommunications to increase the state's share of revenues.

Companies negotiating with Ecuador includes Brazil's Petrobras, Spain’s Repsol-YPF, and China's Andes Petroleum consortium.

Sign on the line: Ecuadorean President Rafael Correa says he has reached out of court settlements with foreign oil companies operating in the country

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