Page 21 - LatAmOil Week 46

LatAmOil ECUADOR LatAmOil

Pipeline ruptures in April have contributed to the oil industry’s challenges (Image: Ministry of Hydrocarbons)

Ecuador expects crude output

to miss target figure in 2020

ECUADOR is expecting to end 2020 with crude levels down for some time. In turn, Ortiz said,
output falling “significantly” below initial expec- the drop in production complicated Ecuador’s
tations, mainly because of budget cuts at state efforts to meet its long-term oil sales commit-
oil companies but also as a result of issues with ments to China and Thailand. The country is
pipeline infrastructure earlier this year. trying to renegotiate delivery schedules with the
Energy Minister Rene Ortiz told a local radio two countries, he said.
station that production was likely to average Ecuador has signed a number of oil-for-loans
480,000 barrels per day at the end of the year, deals with China and Thailand over the last dec-
according to a Reuters report. This is 11.6% ade. Beijing has been helping to finance Ecua-
below the target figure of 543,000 bpd in the dor’s oil sector since 2009, when state-controlled
government’s budget for 2020. PetroChina first offered Petroecuador $1bn in
“It is enormous and difficult to overcome. financing.
It will take time and money,” Ortiz was cited as During the administration of Rafael Correa,
saying in a separate interview with local televi- who served as president of Ecuador between
sion channel Teleamazonas. 2007 and 2017, the country’s oil industry became
According to official data, Ecuadorean oil largely financed by China. In a landmark $2bn
output averaged 531,000 bpd last year. Officials deal in 2012, Beijing agreed to provide the South
in Quito had hoped to top that level in 2020, but American state with energy financing until 2020
the global coronavirus (COVID-19) pandemic in return for receiving as much as 90% of Ecua-
has hit Ecuador’s government revenue this year. dor’s oil shipments a year.
As a result, Ortiz explained, the cash-strapped Ecuador has South America’s third-largest
government has had to cut spending on oil pro- oil reserves after Venezuela and Brazil. Gov-
duction by $600mn. ernment-run Petroecuador usually exports
Additionally, the sector has struggled with an average of 180,000 bpd of crude, including
the rupture of two key pipelines earlier this around 120,000 barrels of Oriente crude, the
year. These incidents led Quito to declare force highest-quality grade produced in the Amazon
majeure on oil exports in April and kept output region. ™

Week 46 19•November•2020 www. NEWSBASE .com P21