April 4 (Bloomberg) -- Brazilian state-controlled oil company Petroleo Brasileiro SA's investments in Ecuador will reach $1 billion by 2010, Brazilian President Luiz Inacio Lula da Silva said.

``We are confident this state company, recognized for its efficiency and environmental standards, will continue to contribute to the development of oil resources in the neighboring country,'' Lula said in Brasilia today.

Lula, as part of efforts to bolster Brazil's influence in Latin America and counter the growing clout of Venezuela's president Hugo Chavez, today met Ecuador's President Rafael Correa. Under Chavez, Venezuela has used its oil revenue to eclipse Brazil as a regional leader, giving aid to Cuba, Bolivia and Ecuador.

Correa and Bolivia's Evo Morales, who rose to power with Chavez's support, have posed hurdles to Brazilian oil investments. Correa in February said the government may nullify its contract with Petrobras if it finds the company is violating an environmental agreement.

Marco Aurelio Garcia, Lula's aide for international affairs, said Petrobras has already invested $500 million in Ecuador. Lula and Garcia spoke after the meeting with Correa.

Castro's Criticism

Garcia also rebutted Cuban Leader Fidel Castro's criticism of a U.S.-led drive to foster crop-based fuels production in the region to reduce reliance on oil and curb Venezuela's regional influence. He said Castro was mistaken to say biofuel production will curb food supplies as Brazil isn't planting sugarcane to make ethanol in land that was previously used to grow cereals.

Castro, in his first signed article since he had intestinal surgery in July, last week accused U.S. President George W. Bush of condemning billions of people to ``premature death'' by promoting the use of biofuels.

Brazil's Petrobras today signed a memorandum of understanding with Ecuador's state-owned PetroEcuador to propose plans to explore the Ishpingo-Tiputini-Tambococha oil fields, the Rio de Janeiro-based company said in an e-mailed statement.

Chilean state oil company Empresa Nacional de Petroleo and a unit of China Petroleum & Chemical Corp., Asia's largest oil refiner, will bid with Petrobras to develop the ITT fields.

To contact the reporter on this story: Carlos Caminada in Sao Paulo at at ccaminada1@bloomberg.net

Last Updated: April 4, 2007 17:46 EDT