July 18, 2017 / 11:04 AM / 5 months ago

UPDATE 1-OPEC's Ecuador says plans to gradually increase oil production

(Adds quote on Ecuador raising oil output)

QUITO, July 17 (Reuters) - OPEC member Ecuador will no longer comply with an agreed OPEC production cut due to the country’s financial difficulties and plans to gradually raise its oil output, the government said on Monday.

Oil Minister Carlos Perez said that Ecuador’s compliance with the agreed cuts was only around 60 percent, putting current output at 545,000 bpd.

“We need funds for the fiscal treasury and for that reason we’ve taken the decision to gradually increase production, although not to the country’s full potential, because of OPEC’s output restrictions and the ceiling that we have as a result,” Perez said in a televised interview.

The country’s fiscal deficit will hit 7.5 percent of GDP this year, the government says, as it continues to suffer from the global fall in oil prices.

Under an agreement between members of the Organization of the Petroleum Exporting Countries and other oil producers led by Russia, the South American country agreed to contribute a 26,000 barrels per day reduction to its oil production.

“Unfortunately, we are currently at a reduction of around 16,000 bpd. We are not meeting the quota imposed on us because of the obvious needs the country has,” Perez said.

A Reuters monthly survey of OPEC output shows Ecuador’s compliance with the terms of the deal has never been above 69 percent since the agreement came into effect on Jan. 1.

“There is an unwritten agreement with OPEC to have some kind of flexibility regarding Ecuador’s needs,” he added.

“What Ecuador does or does not do has no great impact on OPEC’s total output.” (Reporting by Alexandra Valencia and Amanda Cooper in London; Writing by Girish Gupta and Ahmad Ghaddar; Editing by Sandra Maler and David Evans)

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