Fees payment to private oil companies is affected by low oil prices

The contract of services provision for private oil companies start to have complications by the low on oil prices.

The state can eventually participate in a lesser amount in the oil revenue from private companies, to which it pays a fixed rate. Furthermore, it could begin to accumulate debts to these firms.

Currently, 20 contracts to provide services are in force with more than a dozen of private oil companies.

Last Friday, the price of WTI crude closed at USD 66.15 in the New York Stock Exchange. This –substracting the differential value or punishment quality- resulted in a price of USD 58.90 for the East crude, which corresponds to 66% of all the oil produced in the country.

Luis Calero, consultant on oil issues, said that this situation shows that the model of services provision is only beneficial to the state in the case of high prices, as when they fall, the country assumes all the risk without affecting the company.