Fernando Villavicencio presents his revealing book “Ecuador: Made in China”

The legislative advisor in oil issues, Fernando Villavicencio, presented yesterday afternoon at the Hotel Unipark of Guayaquil, his latest publication “Ecuador: Made in China“, which, with 419 pages, details the direct oil sales agreements between Ecuador, China and Venezuela, and denounces the participation of several companies and states as intermediaries in these transactions, thus hurting the economy of the country.

Villavicencio, who has published nine books of oil issues prior to this one, states that “Ecuador: Made in China” is a collection of fragments published since 2008, when the government of President Rafael Correa established alliances with China, Iran and Venezuela.

The title of the book, according to the writer, represents Ecuador and its infection of all of its economic activity due to the presence of Chinese capital.

“Ecuador: Made in China”

In an interview with El Comercio Newspaper, Villavicencio assured that Petroecuador and the Government, since 2007, have declared war on intermediaries or “traders” of oil and oil products that rule the market for 30 years, such as Vitol , Trafigura and Glencore companies.

However, on hundreds of certificates of origin and “bills of Landing” (certificates of origin and destination of oil) these companies have supplied nearly 100% fuel to Ecuador directly or through the screens created in this Government, which, according to the consultant, consisted in direct sales with PDVSA, Ancap, PMI, ENAP of Chile, Petrochina and Sinopec.

The swap agreements of crude for crude derivatives, establishes the exchange of a barrel of oil for its equivalent in gasoline. However, the Oil Minister of Venezuela, Rafael Ramirez, said in April 2012 that they resold Ecuadorian oil.

Also, the management report from PDVSA in 2011, notes that through the agreement, a profit of $ 334 million was made, by reselling the Ecuadorian crude.

In conclusion, the benefit of this whole business is for intermediaries. According to research from Villavicencio, since 2008 until today, Ecuador has sold 720 million barrels of oil and 90% of it was delivered by direct sales, ie, the Ecuadorian state has lost about $ 2000 million brokering its oil.

Fernando Villavicencio

Villavincencio also explained the complexity of negotiating with China, by explaining how the anticipated sale of oil to that country works.

According to the book, the government ensures that anticipated sales of crude are being performed. But, the researcher says that being the case, the delivery of $ 1,000 million should not have an interest rate. Moreover, if it was only a prepaid, to pay the $ 1,000 million, 10 million barrels at a price of $ 100 per barrel, would have been required. However, he says, in the first contract 69 million barrels were delivered. This means that Petroecuador gave 7 times more than what was required to repay the loan.

In addition there is a commission of 1.07% in the first two loans, whose collector remains unknown. “That has to be clarified by the finance minister” demands.

Research shows that Petroecuador has signed 10 contracts for the provision of oil and fuel oil since 2008, which consists of 460 million barrels of oil until 2019 delivered to Petrochina. This company resold the contracts to the Taurus Company, which in turn resold the oil to U.S. refineries. This company charges the actual market price. Petrochina receives that money, pass it to the China Development Bank (CDB) and then delivers it to Ecuador with credit discounts and a lower price per barrel.