The increase in production in 2023 depends on Petroecuador obtaining environmental permits to expand operations in Yasuní.
Ecuador ended 2022 with a stagnant oil production and in 2023 there will be no improvement unless Petroecuador obtains the environmental permits to expand production from the Ishpingo field, which is part of block 43-ITT.
He recognizes it Minister of Energy, Fernando Santos Alvitewho added that another limit is the reduction of the budget of the state oil company Petroecuador.
The problems in the oil sector Ecuadorian “has been dragging on for years and is not going to be resolved anytime soon. We continue with stagnant production,” says Santos.
We continue with the stagnant production.
And he adds that “more production is going to take a big effort to attract quality companies and open up the Southeast area.”
Make use of the Southeast oil blocks of the Amazon, on the border with Peru, is a long-delayed project, since 2013, when Ecuador unsuccessfully launched the first round of bids for those deposits.
Ecuador’s oil production was 480,299 barrels per day in 2022, according to the Agency for the Regulation and Control of Energy and Non-Renewable Natural Resources.
That volume is barely 1.5% higher compared to 2021 production and slightly ahead of 2019.
What is the scenario for the oil sector in 2023?
Petroecuador faces several challenges. The first is a budget cut from the Treasury Department, which will limit its activities.
The company requested a budget of $5.721 million, but Finance approved $4.5 billion.
In addition, Petroecuador has inherited a outdated electrical system and unreliable.
And the main problem is that there are problems with the Ishpingo field, which is part of block 43-ITT.
From block 43-ITT, Ishpingo It is the field with the largest reserves. Therefore, there was an expectation to increase production, but there are obstacles.
There are difficulties and obstacles in the Ishpingo field.
What are those obstacles?
One of these is the environmental permit to place four more platforms in the buffer zone of the Yasuni National Park.
Second, Petro has found Ecuador extra heavy crude oil (less than 10 degrees API) and you have no experience to handle it.
If environmental permits are obtained in the buffer zone, the production increases by 30,000 barrels per day.
That would increase the country’s production to 520,000 barrels per day.
Petroecuador has found extra heavy oil and does not have the experience to deal with it.
How feasible is it to obtain these permits, given that the Constitutional Court banned oil extraction in the buffer zone of the Yasuní Park in May 2021?
The ruling of the Constitutional Court it’s not very clear. The buffer zone is far from the immaterial zone. The matter is in the hands of the Ministry of the Environment.
The Department of Energy has proposed a horizontal drilling plan that minimizes environmental impact.
In addition, there is room in the country for a sincere dialogue about the truth of the Yasuní. There are cameras installed literally every two trees in Yasuní National Park and no uncontacted native has ever been seen, they don’t appear in that area. It may be a myth, a tradition that does not correspond to reality and that limits us.
Petroecuador has done a good job, so far there has been no leakage or environmental damage in the Yasuní.
We cannot leave the Ishpingo field without producing, the country needs that oil. If we leave it underground, we’re making a mistake.
We can’t leave the Ishpingo field without producing.
When is the statement from the Ministry of the Environment expected?
Until February 2023.
In 2022, there was bidding on the Sacha field. Are those plans still going ahead?
We are considering a tender for the concession of the Sacha field to the private company so that it can use capital and technology to increase production.
We hope to offer Sacha in the first half of 2023 (the field produces 71,800 barrels per day and is the second largest, after Auca, ndr).
In addition, the exploration and extraction of oil in the southeastern part of the Amazon is planned in the medium term.
We are considering a tender for the concession of the Sacha field to a private company.
Why do you think these areas that have been on stand-by for years can be put out to tender?
The social problems there are major, so we have to wait for the Prior Consultation Act. It is necessary to talk to the communities and show them the benefits that opening up this area to oil exploitation can bring.
In 2023, we will celebrate the 20th anniversary of the commissioning of the Heavy Crude Oil Pipeline (OCP). This pipeline doubled Ecuador’s oil transport capacity from 360,000 barrels per day to 810,000 barrels per day.
But in those 20 years we have been stuck with production of less than 500,000 barrels per day.
The problem is that from 2005 Rafael Correa’s government launched a hostile campaign against private and foreign companies and ended up kicking out many companies.
You need to rethink the model. The state system has failed. We must invite private companies to restore oil production. You have to open up to private capital, that takes time and calls for good strategies.
And what happened to this government’s goal of doubling production?
More production will take a lot of effort to attract quality companies. The oil problem has been dragging on for years and will not be solved soon.
I think we’re going to continue with stagnant production in the near term, I’m being honest.
The tender for the Amistad natural gas field was scheduled for December 2022, but has not taken place. What happened?
We hope to be able to tender it in January 2023. One of the problems is that there was no Board of Directors in Petroecuador because the manager of the Coordinating Society of Public Limited Companies was not appointed.
But Joaquín Ponce has already been mentioned. And in these days we will establish a Directory to authorize Petroecuador to bid on Campo Amistad.
In these days we will create a Directory to authorize Petroecuador to bid on Campo Amistad.
However, blocks 16 and 67acquired by Petroecuador on January 1, 2023, will be tendered in the second half of 2022.
An environmental analysis must be made of how the operator Petrolia (a subsidiary of Canada’s New Stratus Energy) exits the blocks.
