Ecuadorian President Rafael Correa has threatened to expel Spanish oil firm Repsol YPF unless the company drops a lawsuit against the country over a tax dispute, reports said.
"If Repsol wants to continue in Ecuador they have to drop the arbitration," Correa said Saturday in his weekly radio address, Xinhua reports.
"We would like them (Repsol) to stay ... but they can't stay in a state they are suing," he added.
Correa vowed to keep pursuing a fee-for-service contact with the company instead of the current profit-sharing agreement.
This is not the first time that Ecuador has threatened to expel Repsol. The president said his government has given an ultimatum to the company.
Repsol filed a claim against Ecuador in June 2008 with the World Bank's International Center for Settlement of Investment Disputes. The claim challenges a law that requires the company to pay 99 percent of windfall earnings on oil projects to the Ecuadorian government.
In November, Repsol reached a last-minute deal with Ecuador to overhaul its contractual terms after the country unilaterally rescinded its contract with it.
After Correa took office in 2007, the Ecuadorian government decided to have foreign oil companies revise their contracts to continue their operation in the country.
Daily oil output in Ecuador reaches some 500,000 barrels per day. Oil is the country's main source of income.
Repsol has three exploitation contracts lasting till 2012 in Ecuador's Amazon region, with an average output of 63,000 barrels a day.