Unrest forces Ecuador to curtail oil output: Update

Market: Crude oil, Oil products
08/10/19

Adds details throughout.

Crude production in three Ecuadorean fields operated by state-owned PetroAmazonas was halted yesterday amid protests that President Lenin Moreno blames on political opponents at home and abroad.

Roughly 12pc of 545,000 b/d of production has been affected, according to an oil ministry report issued late yesterday.

Protests and roadblocks have prevented state-owned PetroEcuador from producing and transporting about 45,600 b/d from the Sacha field on block 60 in Orellana province, the ministry said. At the Auca field on block 61, also in Orellana, PetroAmazonas shut in about 9,050 b/d and Ecuadorean independent Petrobell halted another 3,000 b/d.

On block 57 in Sucumbios province, PetroEcuador was forced to close a power plant, suspending output from the 5,600 b/d Libertador field.

The Ecuadorean military has stepped up security around oil installations as the unrest grinds on. The protests erupted last week after the government lifted fuel subsidies as part of an austerity package coordinated with the International Monetary Fund (IMF). The Moreno government has taken steps to revive foreign investment, including the restoration of oil production-sharing contracts.

In a national address, Moreno blamed his exiled predecessor Rafael Correa and Venezuelan president Nicolas Maduro for instigating violence with the goal of overthrowing his government. Moreno took office in 2017 and quickly broke with Correa, his former political ally, after uncovering widespread corruption, including tainted contracts to repair state-owned PetroEcuador's 110,000 b/d Esmeraldas refinery. Among Moreno's boldest moves was the October 2017 arrest of powerful former vice-president Jorge Glas. Correa led the country for a decade until Moreno took office in May 2017.

"This is not a strike, it is not peaceful, it is organized and its goal is chaos," Ecuador's interior minister Maria Paula Romo said of the ongoing crisis.

In a statement today, the governments of Argentina, Brazil, Colombia, El Salvador, Guatemala, Peru and Paraguay said they reject "all efforts to destabilize legitimate democratic regimes" and expressed support for Moreno's actions to "recover peace, institutionality and order, using the instruments authorized in the constitution."

The governments "reject any action aimed at destabilizing our democracies on the part of the regime of Nicolas Maduro and that seeks to extend the framework of his nefarious government work on the democratic nations of the region."

The statement of regional support for the Moreno government grew out of Latin American coordination in the Lima Group, which was created in 2017 to impose diplomatic and political pressure on Maduro, whom much of the region no longer recognizes as Venezuela's legitimate president.

In a video posted on social media today, Correa blamed the Moreno government for repression and corruption, and called for early elections. "They have destroyed our country, but we will recover it....there was no need for an [IMF] package." Reports that Correa is currently in Caracas could not be confirmed.

In a tweet on 3 October, the day before the fuel subsidies were lifted, Maduro "expressed solidarity" with Ecuador's people and said, "Enough of IMF packages! Enough misery!"

Correa was among the regional political allies of Maduro and his late predecessor Hugo Chavez. Among other like-minded Latin American leaders was Argentina's former president Cristina Fernandez de Kirchner, who is likely to win a return to office as vice president in that country's 27 October presidential election.

According to Ecuador's oil regulator ARCH, crude production nationwide averaged just over 542,000 b/d on 6 October, down from 545,000 b/d the previous day. The decline came primarily from Repsol's operations, but the Spanish firm attributed it to operational issues unrelated to the unrest.

PetroAmazonas accounts for about 80pc of national production, following by Chinese state-owned Andes Petroleum, Chile's state-owned Enap and Repsol.

In a related development, neighboring Colombia closed its consulates in Ecuador until further notice as a result of the unrest. Ecuador's schools are also closed.

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