Page 7 - LatAmOil Week 40 2019

LatAmOil ECUADOR LatAmOil
Ecuador ends motor fuel subsidies
ECUADOR’S President Lenin Moreno said last week that his administration was eliminat- ing subsidised pricing for gasoline and diesel. In Decree No. 883, issued on the evening of October 2, Moreno said that he had charged the Hydrocarbons Regulation and Oversight Agency (known locally as ARCH), with intro- ducing a new pricing system more in tune with world fuel markets.
Under the decree, ARCH will set wholesale prices for five types of motor fuels – premi- um-grade diesel, grade-2 diesel, extra-grade gasoline, super-grade gasoline and extra-grade gasoline with ethanol – on a monthly basis. e agency will calculate these prices on the basis of weighted average costs, along with expendi- tures for transport, storage, marketing by the national oil company (NOC) Petroecuador and any applicable tax payments.
e decree serves to reverse a policy that has been in place for more than 40 years. Moreno has argued that the change is necessary, saying that Ecuador’s government can no longer a ord to foot the bill for cheap fuel.
Nevertheless, the policy shi has drawn con- siderable opposition. According to local press reports, the unveiling of the new pricing regime has sparked public demonstrations and unrest in Quito and other cities. The government countered by declaring a state of emergency on October 3.
Moreno has responded sharply to critics, say- ing that the li ing of the subsidies would remove barriers to economic growth in Ecuador. He claims that the government has spent about $60bn since the 1970s, or about $1.3bn per year,
PERU
Peru LNG reports exports
up year on year in September
to keep motor fuel prices arti cially low.
e president has also described the old pol- icy as illogical and counterproductive. “On the [South American] continent, the only country that has this subsidy is Venezuela. It is not the best example to follow,” he said during a national address last week. “And as you know, this sub- sidy has bene ted for decades mainly those who do not need it and [those who] live o of con- traband. ese resources should be invested in health, education, housing [and] social security
for all Ecuadoreans.”
e elimination of fuel subsidies was part of
a wider e ort to reform the Ecuadorean econ- omy and cut state spending in a bid to preserve the country’s $4.2bn loan deal with the Interna- tional Monetary Fund (IMF). Moreno said last week that his government hoped to mitigate the impact of these reforms by increasing social welfare payments by the equivalent of $15 per month per family.™
The policy change has sparked street demonstrations and strikes (Photo: EPA)
PERU’S national oil company (NOC) Peru- petro reported last week that the country’s only LNG plant had seen exports rise year on year in September.
According to data published by Perupetro, the Peru LNG consortium, which operates a gas liquefaction plant and export terminal in Pampa Melchorita, loaded five vessels with 822,014 cubic metres of LNG last month. is marked a 38.2% increase in volume on loadings in Sep- tember 2018, when the group exported a total of 594,665 cubic metres of LNG via four cargoes.
Even so, exports did decline month on month. According to previously released data,
Peru LNG loaded six vessels with 899,136 cubic metres of LNG in August. As a result, export vol- umes dropped by 8.6% on the previous month’s levels.
Peru LNG has loaded and dispatched a total of 537 cargoes of LNG since its launch in June 2010, Perupetro noted last week. Of the ve car- goes exported in September 2019, three went to Spain, one to South Korea and one to China, it said.
e Peru LNG consortium, which includes the US company Hunt Oil and three partners, spent $3.8bn on the construction of the Pampa Melchorita facility.
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