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QUITO: Ecuador on Tuesday announced it would auction eight oil blocks in the Amazonian province of Sucumbios, the second such tender this year as the Andean nation seeks some $1 billion investments in its oil sector.

Ecuador will jointly operate the fields with private companies under a model based on the price of crude oil, production increases and taxes. The country must keep a 50 percent minimum stake in the ventures.

Ex-president Rafael Correa suspended that operating model a decade ago, saying it was detrimental to the interests of the country, and replaced it with contracts for certain services, where the state paid a fee for operations but kept all the production. His successor Lenin Moreno, who has broken with Correa, has brought back the model, arguing that it will stimulate investment.

"State participation will fluctuate based on how crude prices change, and neither the state nor the companies will lose because there are limits," Energy Minister Carlos Perez told journalists on Tuesday.

Under the system, each party sells its own share of oil but the private company is responsible for all investments in the project, according to the terms of the contract presented to investors.

Perez explained that if crude oil prices fall or the contractor's revenue is higher than the state's, a so-called sovereign adjustment tax can be applied to ensure the state does not lose out.

The blocks Iguana, Perico, Araza Este, Panayacu Norte, Espejo, Sahino, Charapa and Chanangue, contain about 854 million barrels of oil with an API grade between 23 and 32, according to official data. They have not been fully exploited, but they have prior technical studies and infrastructure.

Authorities expect to sign the contracts for a period of 20 years in March 2019. Another oil tender is planned for the last quarter of the year.

Copyright Reuters, 2018