New hydrocarbons law to increase government revenues by US$550mn - Ecuador

Reforms to Ecuador's hydrocarbons fiscal regime will bring the government extra revenues of around US$550mn a year, the country's non-renewable natural resources minister, Wilson Pastor, announced.
The reforms came into force after the country's President Rafael Correa approved the legislation late last week, state news agency El Ciudadano reported.
The approved legislation has three chapters that cover service payment rates, institutional environment and taxes, BNamericas previously reported.
For investment in fields in production, 15% of profit would be recognized for operational costs and up to 25% for new investment in exploration, depending on the estimated geological risk.
On the institutional front, the initiative aims to create a hydrocarbons department and a national hydrocarbons agency. The first would manage oil assets, evaluate reserves, identify production areas and carry out bidding; the latter would act as regulator.
The second chapter also envisions the restructuring of state oil company Petroecuador into two companies, one for E&P and the other for refining and commercialization.
The reform package includes a transitory clause that establishes a timetable for replacing current production sharing contracts with service payment contracts.
A period of 120 days would be given for large contract holders to reach an agreement with the ministry, and 180 days for smaller contracts. A total of 22 contracts would be modified.
The government is expected to set a contract liquidation price for companies that do not accept modifications.