New Stratus Energy Ecuador unit seeks negotiation with government

QUITO, Dec 1 (Reuters) - Petrolia Ecuador S.A, a subsidiary of Canadian energy company New Stratus Energy (NSE.V), hopes to hold negotiations with Ecuador regarding its continued operation of two blocks in the Amazon, which would avoid international arbitrage, general manager Ramiro Paez said on Thursday.

The company notified Ecuadorean authorities last week that it will enter a legal dispute over contracts for blocks 16 and 67 in Orellana province, which together produce 15,000 barrels of oil per day (bpd), citing the state's breaching of the agreements.

Current contracts expire this month and the company wants to reach an agreement to extend them by 15 years and convert them to participatory contracts, rather than service contracts.

"If 30 days pass after attempting direct negotiation, resulting in no contract, and without sitting at a table to renegotiate (terms), a process of international arbitration could begin," Paez said in an interview with Reuters.

Ecuador has failed to comply with existing contracts after non-payment of $15 million of debt over tax adjustments and suspending talks regarding contract changes, the company says.

The energy ministry did not immediately comment on the legal dispute, but has previously said it has begun a process of revising blocks in the hands of the state.

Authorities have said Petrolia's request to extend the contracts came after the deadline.

The South American country started the year with a process so that oil companies could switch service contracts - where companies are paid for operating fields - to participation contracts, in which businesses can benefit from a slice of the production earnings, in a bid to attract investment.

If Petrolia is granted a participation contract, it is ready to invest some $200 million in the first two years to boost production to around 23,000 bpd, Paez said.

"We're concerned that, being close to the end of our contract, we aren't able to demonstrate that we wish to invest," he added.

Reporting by Alexandra Valencia; Writing by Oliver Griffin; Editing by Stephen Coates

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