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The new Chinese loan agreement, which has China-Latin America Finance Database, a joint
been under negotiation for months, is expected effort between the Inter-American Dialogue
to complement Ecuador’s recent $17bn bond and Boston University. It has also committed
debt structuring, as well as the $6.5bn loan pack- to selling millions of barrels of oil to state-run
age approved earlier this month by the Interna- Chinese firms since the early 2000s.
tional Monetary Fund (IMF). Meanwhile, Ecuador has also been the ben-
It will also restructure the South American eficiary of oil-for-loan agreements with PTT
state’s outstanding obligation to deliver nearly since 2009. However, these deals have been
200mn barrels of crude oil supply in line with smaller in scale. than the deals with China.
existing credit agreements, according to Ortiz. Along with financing deals, China has
The minister also stressed, though, that the snapped up assets across Latin America in
loan would be a sovereign instrument signed recent years. State-run PetroChina now has
by Ecuador’s government and not by the state- operations in Peru, Colombia, Cuba, Brazil,
owned oil and gas firm PetroEcuador, as the pre- Costa Rica and Venezuela, as well as Ecuador. ™
vious agreements with China were.
He went on to say that the credit would be
secured by PetroEcuador’s long-term crude
sales, but at formula-based market prices. This
pricing regime will encourage competition
among Chinese trading companies such as Pet-
roChina and Unipec, as well as third parties such
as Thailand’s state-run PTT, which may also be
involved in the restructuring, he said.
China is Ecuador’s largest creditor. The latter
received a total of $9.9bn from Chinese lend-
ers between 2005 and 2013, according to the PetroEcuador is not a party to the deal (Photo: Ecuador Times)

GLOBAL
Fossil fuel producers not prepared

to meet Paris targets, research says

NONE of the world’s fossil fuel producers will on the electricity sector and that the core busi-
be able to limit climate warming to 2°C by 2050, ness model is not under threat, as technology for
according to new research published this week. decarbonising electricity already exists. “For oil
Research from the Transition Pathway Initi- and gas companies, the route to Paris alignment
ative, which is backed by the London School of is much more of a challenge to their basic reason
Economics and a number of investors, warned for being. Some companies have started grap-
that oil, gas and coal companies are not putting pling with this challenge, but none have met it
in place policies that will limit temperature yet, he said.”
growth and contribute to combating climate The report also found that seven European
change. companies, five oil and gas and two coal, had
The report examined 125 oil and gas produc- managed to bring their future emissions targets
ers, coal miners and electricity groups on their into line with the Paris Agreement. These are:
preparedness for a lower-carbon economy. Royal Dutch Shell; Repsol; Total; Eni; Equinor;
“Investors have witnessed a flurry of sig- Glencore and Anglo American. No Chinese or
nificant climate announcements by fossil fuel US companies were judged to be in line with
majors this year, so it is striking this independent Paris commitments. Matthews said there is yet
research still shows those commitments do not to be “meaningful action” from US companies to
yet align with limiting climate change to 2°C,” reduce carbon emissions.
said Adam Matthews, co-chair of the Transition The report highlighted that that the 2015
Pathway Initiative. Paris Pledges would only reduce emissions
On the other hand, the report found that to 3.2°C warming, according to the UN Envi-
many companies in the electric utility sector ronment Programme, and are widely regarded
were judged to be aligned, with 39 meeting Paris as insufficient to prevent dangerous climate
Pledges and 22 meeting the more ambitious change. TPI also assessed 66 electric utility com-
“below 2°C” benchmark. panies, finding that 39 (59%) were aligned with
The report’s author, Professor Simon Dietz, the Paris pledges and 22 (33%) with the “below
said this difference comes from more regulation 2°C” benchmark. ™

P16 www. NEWSBASE .com Week 41 15•October•2020