It is the latest tussle with private investors by Correa, the leftist leader who shocked markets with a $3.2 billion bond default in 2008 and also has tightened government control of mining.
"I am preparing a law to facilitate expropriation and nationalizations," Correa told cable news network Telesur in a interview shown on Tuesday. "With this instrument we will do what we have to in the right moment."
Leaders in other Latin American nations have pushed for more state control over natural resources since Venezuela's socialist leader Hugo Chavez in 2007 nationalized multibillion-dollar oil projects and pushed ExxonMobil and ConocoPhillips out of the country.
Correa had said at the weekend that the law would allow the government of the OPEC nation to take over oil operations but did not mention permanent nationalizations.
The president on Tuesday also accepted the resignation of his minister in charge of energy and current OPEC President, Germanico Pinto, and his finance minister Elsa Viteri, as part of a reshuffle of his government, now in its fourth year, a ministry adviser and a government source said.
Spain's Repsol, Brazil's Petrobras, Chinese consortium Andes Petroleum and Italy's Eni operate in the Andean country, despite Correa's ongoing spats with the private sector.
"Expropriation does not mean confiscation. Confiscation means to take by force without the correct compensation. Here we will compensate them economically, but if they don't want to adapt to the terms of the country, then let them go, we don't need them," Correa said in the interview recorded on Monday.
A European-trained economist and leftist, Correa has so far shied away from outright nationalizations, but shook up the nation's mining law to strengthen environmental laws and government control over silver, gold and copper projects.
He shocked markets in 2008 by defaulting on $3.2 billion of global bonds, arguing they had been negotiated and issued illegally during previous administrations.
The government wants foreign oil operators to give up profit-sharing deals and sign new contracts under which they would become service providers. Talks over the new contracts, which were announced two years ago, are progressing slowly and some say Correa's tough stance could be a negotiating tactic.
"The companies that have decided to stay in the country have stayed, and they are waiting to negotiate these contracts. They are ready to migrate to the contract and keep operating," the president of the Ecuador's Industrial Association of Hydrocarbons, Jose Luis Zirrit told Reuters.
Zirrit said the companies were waiting for the government to negotiate. Several companies have suspended investment in Ecuador while the talks proceed, triggering a drop in output in the smallest member of OPEC.
In Ecuador, Correa's popularity ratings have slipped from over 70 percent to below 50 percent in the last 12 months because of a deep recession in his oil-producing country.
