ANCIENT ELIXIR

Ecuador’s current oil production stands at approximately 550,000bbl/d, with 440,000 of that the handiwork of the state, with the remaining 110,000 extracted by private companies. Output is relatively low when compared to other regional producers such as Mexico and Colombia, both of which have lower declared reserves. Given the room for increased production and growing awareness that fossil resources might not be so precious as time advances, the country is moving forward with plans to add some pizazz to its top exporting industry. On one side, the two main state-owned companies, Petroamazonas (focused on upstream) and Petroecuador (midstream and downstream), are set to merge. This process, which is expected to take effect from on Jan 1, 2021, is being supported by the Inter-American Development Bank through a USD20 million loan. Regarding private production, Ecuador’s government is seeking to attract newcomers into the industry and has done so with fair success after the arrival of players such as Wayra Energy, Gran Tierra, Frontera, and Geopark. “International investors worldwide are now looking at Ecuador in another way, because the country is taking a new road to keeping its economy healthy,” stated Ángel da Silva, CEO of Wayra Energy. The most recent oil round, Intracampos I, saw the final contracts being singed in May 2018, and is expected to attract USD1.17 billion in investments. Currently, Intracampos II is underway with licensing expected for August 2020, contributing a potential US840 million in investments. 20-year concession licenses will be granted under participation or production-sharing contracts. Nevertheless, these fields are seen more as moves to maintain the current production level rather than registering significant increases. The Ministry of Energy and Non-Renewable Natural Resources has announced its intention to tender blocks in the southeast region and the Ishpingo-Tambococha-Tiputini (ITT) area, which have faced opposition by indigenous communities. Consensus for the development of responsible extractive activity is being sought after with the newly proposed Energy Social Pact advocated by the ministry. Meanwhile, refineries in Ecuador are also set to undergo a revamp. A high-conversion facility under Euro-5 standards is currently being tendered, while the most significant refinery at present, the Esmeraldas refinery, is expected to pass into private management through a concession process, adding to the portfolio of state projects being offered up to private investors.