Uncertainty Over New Oil Bill

Given the complex nature of Ecuador's new hydrocarbon laws, the country's declining oil industry faces an uncertain future, in our view. The new energy bill, passed by President Rafael Correa without the approval of the national legislative body, was designed to increase the transparency of the regulatory system and lower the average tax burden for foreign operators in the sector. However, we believe the increased level of state intervention is only likely to worsen investor perceptions of the industry, with the potential to have an adverse impact on the number of foreign companies operating in Venezuela's oil sector.

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