Repsol, China's Andes agree to new Ecuador oil deals

QUITO (Reuters) - China's Andes Petroleum and Spain's Repsol agreed with Ecuador on Friday to switch to a service contract from a production sharing deal, as the leftist government seeks to boost control over the key sector.

A new service agreement means Andes Petroleum and Repsol (REP.MC) will hand over to the state all the oil it extracts in exchange for a fee instead of keeping part of the oil as in the current deal.

Oil Minister Galo Chiriboga said after separate meetings with both companies that they had agreed to start hammering out the details of the new details in negotiations that could take up to a year. Repsol said it still needs to ratify the agreement with its partners in the country.

"Yes, they have agreed to switch contracts," Chiriboga told Reuters, after a meeting between Andes' top executives and President Rafael Correa in Quito.

Correa, a leftist former economy minister, had for months unsuccessfully pushed companies to switch to service agreements to increase the state's intake of their revenues.

Chiriboga later stroke a deal with Repsol, one of the country's largest investors with an output of around 47,000 barrels of oil per day, which also includes extending the company's contract for six years until 2018.

Ecuador struck a similar deal with Brazil's Petrobras (PETR4.SA) on Thursday, but Brazil's state-run oil company was still considering whether it will accept the new contract, the company's international director, Jorge Luiz Zelada, said on Friday.

While the companies negotiate the new deals the government will sign temporary deals with them to immediately lower their tax burden.

China's National Petroleum Corporation senior vice-president Wang Shali, shortly after told reporters the company plans to boost investment in South America's No 5 oil producer.

Andes Petroleum, owned by China's National Petroleum Corp and China Petrochemical Corp (0386.HK) (SNP.N), produces around 60,000 bpd.

Ecuador, a member of the Organization of the Petroleum Exporting Countries, produces around 500,000 bpd, of which nearly half is extracted by private firms and the rest by the state oil company.

(Reporting by Alonso Soto; editing by Marguerita Choy)