French oil firm quits Ecuador

French oil company Perenco is abandoning its facilities in Ecuador amid a dispute with the country's government over alleged tax arrears, officials said.

|"Perenco has severed relations with the workers," said Wilson Pastor, manager of Petroamazonas, a subsidiary of Ecuador's state-owned oil company which will take over crude production.

According to Pastor, "Perenco is seeking to unilaterally terminate its contract" to extract oil.

The terms of the contract state that it will automatically be dissolved if operations are suspended for 30 consecutive days, he said.

A source with knowledge of the situation told AFP that the head of Perenco foresee's the company's departure from Ecuador in the next few days.

The French company extracts around 21,000 barrels of crude oil a day in Ecuador, which accounts for a little less than 10 per cent of worldwide production. Since coming to power in January 2007, left-leaning President Rafael Correa has questioned the terms of agreements between the government and foreign oil companies permitting crude extraction.

According to Correa, the distribution of profits from crude extraction in the country is unfair, and Ecuador's government has also accused Perenco of owing close to 330 million dollars in back taxes.

In March, the government placed an embargo on 70 per cent of Perenco-extracted oil, saying the seizure would pay for the company's arrears.

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