Private oil companies face bleak prospects in Ecuador

Ecuador returned to OPEC after 15 years of absence. The country was accepted as an active member during a rare Heads of State Summit of last November in Riyadh. Measured by its oil production of 540 thousand barrels a day, no big deal. However, Venezuela’s President Hugo Chavez, who leads the pack of price-hawks within OPEC, had good reasons to welcome Ecuador’s homecoming. He sees in the small Andean country an ally and a reinforcement of the trend among oil-rich countries towards growing state control over resources and increased political use of the “oil weapon”. Ecuador’s President Rafael Correa shares with Chavez the conviction that a new type of socialism is the best way to overcome poverty, weak institutions and underdevelopment. He has issued a ‘wake-up call’ from ‘a neo-liberal nightmare’, although Ecuador in fact has hardly ‘reformed’ its economy. So how close is private oil to packing its bags?