ANALYSIS-Ecuador oil grab tracks Chavez leftist moves

By Alonso Soto

QUITO, Oct 5 (Reuters) - Ecuador's president has copied his ally Venezuelan President Hugo Chavez in grabbing oil company windfall revenues in a sign he will use a strong mandate from an election win this week to drive hard-line leftist policies.

Late on Thursday, President Rafael Correa issued a shock decree ordering foreign oil companies to hand over almost all of their "extraordinary" income from record high prices.

"Unquestionably, this represents a major deterioration of the business and investment environment in the country and shows how aggressive the government is prepared to be in dealing with the private sector and in pursuing its nationalist inward-looking strategy," Alberto Ramos, a senior economist at Goldman Sachs, wrote in a research note from New York.

"The sectors that in our view are now most at risk are: wireless telephone companies, banks, media groups, and the mining sector," he said.

The oil move will cost companies about $830 million in lost revenue, according to the government, hitting the profits of some of Ecuador's largest foreign investors such as Brazil's state-owned Petrobras (PETR4.SA: Quote, Profile, Research) and Spain's Repsol (REP.MC: Quote, Profile, Research).

The decree raised the government's share of revenues to 99 percent from 50 percent above a set benchmark price, which the oil minister said was around $23 per barrel.

Correa's measure comes against a backdrop of worldwide resource nationalism, where governments from Kazakhstan to Russia to Bolivia, want to squeeze oil companies' profits as crude prices have soared to above $80 a barrel.

The decree also reflects a sharp turn to the left away from free-market economics in some Latin American countries.