UPDATE 1-Ecuador sets 10-day deadline for France's Perenco

(Updates with quotes, background)

QUITO Aug 19 (Reuters) - Ecuador's oil minister on Wednesday set a 10-day deadline for France's Perenco to comply with its oil extraction contract and resume control of its fields in Ecuador.

Ecuador's state oil company Petroecuador seized control of Perenco's operations on July 16, after the company ordered a temporary halt of production over a tax dispute.

Oil minister Germanico Pinto told a press conference that the company has 10 days to explain why it decided to halt production last month and lay off all its workers.

Ecuador had seized the bulk of Perenco's production since March in a bid to collect more than $350 million it says the company owes in windfall taxes. Ecuador could terminate Perenco's contract on the grounds that the company is not producing oil.

"The company has 10 days to reply to our note and explain why (it halted production and sacked its workers)," Pinto said.

In a press release, the oil ministry said that within the 10-day deadline, Perenco must comply with its oil extraction contract and solve the "technical and operational" problems that prompted the company to suspend production last month.

The ministry accused Perenco of "abandoning" its fields, while the company has lashed out at the Ecuadorean government for "confiscating" them.

Perenco laid off all its workers in Ecuador on July 29, almost two weeks after Petroecuador took control of its fields.

Perenco extracts 22,000 barrels of oil per day from two blocks in Ecuador's Amazon jungle, which roughly amounts to 5 percent of the 490,000 bpd that Ecuador produced in June.

Burlington Resources, a subsidiary of ConocoPhillips (COP.N), has stakes in the two blocks operated by Perenco in Ecuador.

Perenco launched a suit against Ecuador and Petroecuador last year at the World Bank's International Center for Settlement of Investment Disputes to dispute the legality of the windfall tax, saying the levy violates its contract.

The tribunal accepted a request from Perenco in May to block any forceful collections until the center rules on the legality of the windfall tax.

Ecuador hiked the windfall tax to 99 percent from 50 percent in 2007 as a way to pressure foreign oil companies to rework their extraction deals, but later lowered the tax to 70 percent.

In 2006, Ecuador ended the contract it had with Occidental Petroleum (OXY.N) and seized all its assets, after accusing the company of trying to sell part of an oil block without state authorization -- a claim that Occidental denied. (Reporting by Alexandra Valencia; Writing by Eduardo Garcia; Editing by Gary Hill)