SOLVENT AND sustainable
The manner in which the state regulates the country’s nascent mining industry will determine the extent to which Ecuador is both sustainable and solvent for decades to come.
Launched Ecuador’s Public Mining Policy 2019-2030 Aims to improve the investment climate and legal certainty for mining companies
Ecuador left OPEC on January 1, 2020. What effect will this decision have on the sector?
The decision of the Ecuadorian government is related to internal matters and challenges that the country must overcome, particularly in connection with fiscal sustainability. The measure also allows us to generate new investments in the hydrocarbon sector for exploration and production to increase domestic production, which is one of the axes of the policies that we want to implement. This will be achieved through the oil rounds Intracampos II and Suroriente, in addition to the development of the Ishpingo field, which is part of the bloc 43 – I, in the province of Orellana. Ecuador’s production level is low as compared to other OPEC countries; however, we have fulfilled the agreed measures and have achieved better results in terms of cost, without halting the main projects that are being developed with the environment and social responsibility in mind.
How would you asses the future of the refinery industry in Ecuador?
As a country, we have to cover the fuel market. Fuels are currently being produced locally as well as imported to meet domestic demand. This is the reason why we want to launch a bidding process to build, through private investment, a new refinery that will process 300,000bpd, according to Executive Decree 861, which authorizes the ministry to develop a refinery on the Ecuadorian coast. In the first stage, we obtained expressions of interest from five companies and a consortium that is interested in the process, which are currently being evaluated according to their technical capacities as well as their proven experience in the sector. We want to conclude the bidding process in May 2020. We also plan to launch a bidding process to administer and operate the Esmeraldas refinery. The goal is to improve environmental conditions and efficiency and produce fuel according to the international regulation Euro 5.
What steps are being taken to create clarity and legal certainty in the mining sector?
We have conducted a number of policies. First, we launched a national plan for the mining sector that establishes a forecast for 2030 and is aligned with the UN’s Sustainable Development Goals. This tool will have plans, programs, and projects that have to meet the axis of the public mining policy. One of the goals is to improve the investment climate and the legal certainty of the mining companies. We expect to have the plan ready in 1Q2020. Second, we have a new regulation to hold public consultations. This new regulation will ensure a participative process for consultations and provide information on the activities of extractive industries in the territories of the ancestral people. Third, we are updating the mining regulation in line with the current needs of the industry and prioritizing areas like obtaining the authorization for plants. Also, this regulation envisions the approval of the design, construction, and operations of deposits of trails. These regulations will regulate mining operations and will provide more clarity about the administrative process and the control of operations.
What are your priorities for 2020?
We have outlined four axes of management. First, we seek a steady increase in the production of natural resources, institutional efficiency, and the energy social agreement to improve the work we are doing in the electric, hydrocarbon, and mining sectors. We want to optimize the resources and be open to new investments with technical and economical solvency according to the constitution. As part of the master plan for the energy sector, we have a portfolio of 49 projects, of which 21 are renewable.