Ecuador hopes to accelerate awarding concessions to outside investors for the Sacha, and Ishpingo, Tambococha and Tiputini (ITT) oil fields this year to increase the South American country's production, energy minister Fernando Santos told Argus in an interview. Santos, a previous minister and industry veteran, took over in October in the wake of corruption allegations that forced out his predecessor. Edited excerpts follow:
Ecuador reached an oil output of 480,300 b/d in 2022 and from 1-23 January, the average was 490,000 b/d. You forecast a daily average of 521,000 b/d for this year. How are you going to add the other 30,000 b/d?
Basically, the Ishpingo field is going to produce another 30,000 b/d. The minister of environment authorized at the end of 2022 the building of another four platforms in Ishpingo, in block 43 (Ishpingo, Tambococha and Tiputini, ITT) close to the buffer zone of Yasuni national reserve. We think ITT's output will increase from 50,000 b/d to 80,000 b/d this year.
Are you planning to tender the ITT?
Yes ... Sacha [block 60] and the ITT are areas that required advanced technology and investments that [state-owned] PetroEcuador currently does not have, but private investors do.
We're planning to tender Sacha and ITT by June this year, and they could be awarded by the third quarter of this year. The awarded companies will sign 15-20 year contracts and will have to invest around $2bn in both areas.
What kind of contract will be offered?
The awarded companies will have to sign a fee-based service agreement. In both contracts, PetroEcuador will pay a fee for the incremental production that could be paid in crude as well.
How much could production increase in each field after the tender is awarded?
We have found heavier crude than we expected, at 9-10° API that comes with a lot of water. However, we have identified American and Canadian companies specialized in extracting this kind of crude.
So I believe ITT's output could increase by 40,000 b/d and Sacha could go up from 70,000 b/d to 100,000 b/d. That increase in both fields will take 2-3 years.
How far has the tender of the offshore Amistad gas field progressed?
The tender should be launched in February and we'll award it in 90 days after that with a fee-based service contract. Ecuador has a huge demand for natural gas. Last year, Amistad produced around 24mn of cf/d, but the country requires more than 100mn of cf/d for the thermoelectric plant Termogas Machala and another two liquefaction plants. We estimate that this year will be able to increase the output by 1mn-2mn cf/d.
How has the Intracampos II round progressed?
We improved a couple of rules of the tender. One of them was that companies with any controversy with the Ecuadorian state couldn't participate. We removed that rule because the companies have the right to defend themselves, so we will separate only the firms that have a final judicial sentence against them. Interested companies can buy the data pack of the tender until February and they will be able to present their offers by March. We'll award the tender in May.
What price do you expect for Ecuadorian oil this year?
In the national budget, we estimated a price of $65/bl for our exported crude. It means that the WTI price should be around $74/bl.
