UPDATE 3-Ecuador hopes to secure new oil deals by March 8

(Adds oil minister's later comments, details)

By Alonso Soto

QUITO, Feb 27 (Reuters) - Ecuador is progressing in talks to increase control over foreign oil contracts and expects to secure a deal by a March 8 deadline, Oil Minister Galo Chiriboga told Reuters on Wednesday.

"We were making very small, final revisions with the president last night," Chiriboga said in a telephone interview. "I always hoped to finish negotiations before the deadline, and I think we will do it."

Ecuador started talks with foreign oil firms in January to boost state participation in five contracts and extend control over the key sector.

President Rafael Correa, a leftist former economy minister, has launched an aggressive drive to rework deals in key sectors from oil to cell-phone providers, which he says have cheated the country out of billions of dollars in unfair contracts.

The government has softened its tone in talks, dropping plans to force companies to immediately switch from participation contracts in which they keep part of the oil they extract to deals that allow the state to keep all the crude.

"We could even explore the possibility that in the future instead of having participation or service contracts we can form join ventures with these companies," Chiriboga told reporters later on Wednesday.

New oil deals are expected to boost much-needed investment in the key sector that experts says suffered last year from Correa's surprise hike of a windfall tax on foreign companies.

"What Ecuador needs is a boost in oil investment -- which has been steadily falling," Gianfranco Bertozzi, an analyst with Lehman Brothers, told clients in a note after Chiriboga's comments. "Ecuador in the end would get better long-run prospects and a greater slice of the now extremely profitable oil business."

Spain's Repsol (REP.MC) and China's Andes Petroleum (0857.HK) are participating in the talks, but have threatened to seek arbitration against the government over the windfall tax. Private oil firms extract half of the country's output of 530,000 barrels per day.

Correa surprised investors last year by grabbing nearly all of the companies' extra revenues generated above a set contractual price, sparking complaints that the tax made private oil business inviable in South America's fifth largest oil producer.

New deals would maintain the current participation status, but include a clause to later switch to service agreements for the state to keep all the crude in exchange for a fee, said government officials and executives of firms involved in the talks.

The transition period from a participation deal to a service contract could take years, negotiators said.

The new deals would also lower the windfall tax burden currently paid by companies, but increase overall state participation and control over the sector, officials said.

Other companies participating in the talks include Brazil's Petrobras (PETR4.SA) and France's Perenco. U.S.-owned City Oriente is seeking an agreement with the government to end its deal and obtain compensation for investment. (Additional reporting by Jose Llangari; editing by Jim Marshall)