UPDATE 4-Ecuador hikes state share from oil firm revenues

(Adds oil minister quotes, details, background)

By Alonso Soto

QUITO, Oct 4 (Reuters) - Ecuadorean President Rafael Correa on Thursday signed a decree to give the state almost all the extra oil revenues generated for foreign firms by high prices, sparking worries of more government control over the Andean country's key sector.

The decree raised the state share to 99 percent from 50 percent of "extraordinary revenues" produced by foreign oil companies above a set, contractual benchmark price.

The government expects to receive around $700 million annually from the hike, which will affect the country's largest investors, Brazil's Petrobras and Spain's Repsol, as well as France's Perenco, China's Andes Petroleum and U.S.-owned City Oriente .

The surprise announcement by left-winger Correa echoed measures introduced by Venezuela's President Hugo Chavez to increase state participation in his country's petroleum industry as part of his self-styled socialist revolution.

Ecuador's current law forces foreign oil companies to hand over at least 50 percent of their extra oil revenues. When that law was created last year, oil companies fretted over investments and some threatened to bring lawsuits.

"The government of the citizens' revolution believes the current law is not enough," Correa said, using the term employed in his election campaign last year. "Today we decree these extra revenues be distributed in a more just way."

Correa, a U.S.-educated economist already spooking Wall Street with anti-free market rhetoric and talk of debt negotiation, said he wants to renegotiate foreign oil contracts to increase the state share, but his government dismissed a Venezuela-style nationalization.