UPDATE 1-Ecuador hikes state share from oil firm revenues

(Adds minister's quote and details)

QUITO, Oct 4 (Reuters) - Ecuadorean President Rafael Correa on Thursday signed a decree to raise the state's share to 99 percent from 50 percent of extraordinary revenues produced by foreign oil firms above a benchmark price.

The surprise announcement by left-winger Correa echoed measures introduced by Venezuela's President Hugo Chavez to increase state control over the petroleum industry there as part his self-styled socialist revolution.

The current law forces foreign oil companies in Ecuador to hand over at least 50 percent of their oil revenues above a benchmark price agreed in contracts. The law was created last year and spooked oil companies worried about investments.

"We will defend our national interests and we are willing to face any national and international lawsuit," Alexis Mera, the president's judicial counselor, told reporters.

Oil Minister Galo Chiriboga said the government is also proposing foreign companies switch from current deals allowing firms to have part of the oil they extract to new contracts where the state will sell the crude itself and pay the companies a service fee to extract the product.

"Given the high oil prices in the international market we want to propose these companies to change their contracts from participation to service provider," Chiriboga told reporters in the press conference. "If they don't want to we will renegotiate under the current contractual system," he said.

Chiriboga brushed off fears of an oil nationalization, saying "We are not nationalizing anything here."

Correa wants foreign oil operators to renegotiate contracts to allow the state more participation in oil revenues.