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QUITO, Jan 26 (Reuters) - OPEC member Ecuador sees oil prices averaging around $55 per barrel this year, Oil Minister Derlis Palacios said Monday.

"Ecuador has restructured its 2009 budget with a WTI (West Texas Intermediate) price of $55 per barrel ... we are talking about around $40 for our oil," Palacios told a local radio station.

Ecuador, the smallest OPEC member with daily output of 500,000 barrels, has slashed investment in its key energy sector as falling oil prices curtailed income.

Ecuadorean President Rafael Correa has announced layoffs at state oil company Petroecuador which is one of the country's largest companies with more than 5,000 workers.

Lower state investment could hurt the Andean country's oil output already hit by dwindling private investment as the government tries to rework current foreign oil deals. (Reporting by Alonso Soto; editing by John Picinich)