Ecuador to boost oil past OPEC lim­its

Northwest Arkansas Democrat-Gazette - - BUSINESS & FARM -

QUITO, Ecuador — Ecuador has dealt a blow to OPEC unity by announcing it will start rais­ing oil pro­duc­tion this month, ar­gu­ing it needs the money.

OPEC has for years cheated on its own agree­ments, par­tic­u­larly when oil prices fail to re­cover af­ter an out­put cut. But Ecuador has taken the rare step of say­ing pub­licly it will in­crease pro­duc­tion, mak­ing it im­pos­si­ble for the group to con­ceal the de­ser­tion.

The Latin Amer­i­can coun­try won’t be able to meet its com­mit­ment to lower out­put by 26,000 bar­rels a day to 522,000 a day, as agreed with OPEC last year, Oil Min­is­ter Car­los Perez said in an in­ter­view with Te­lea­ma­zonas late Mon­day.

“There’s a need for funds for the fis­cal trea­sury, hence we’ve taken the de­ci­sion to grad­u­ally in­crease out­put,” Perez said. “What Ecuador does or doesn’t do has no ma­jor im­pact on OPEC out­put.”

The amount Ecuador had agreed to cut ac­counts for less than 25 sec­onds of daily global con­sump­tion. Still, it does cre­ate a prece­dent in the Or­ga­ni­za­tion of Pe­tro­leum Ex­port­ing Coun­tries, open­ing the door for other pro­duc­ers to fol­low suit.

“Ecuador’s lat­est state­ment will not mat­ter for global bal­ances but it shows the chal­lenges for OPEC mem­bers given the cuts failed to raise prices,” said Am­rita Sen, chief oil an­a­lyst at En­ergy Aspects Ltd., a Lon­don­based con­sul­tant. The an­nounce­ment may “again give rise to fears of the deal fall­ing apart,” she said.

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