The national strike of June 2022, the delays in the plans to increase production and the power cuts affect a drop in oil exports.
Unloading of oil from a Flopec ship in an international port, in 2022.
Ecuador’s oil exports totaled 65.9 million barrels between January and July 2022, the lowest level since 2007.
Compared to the same months of 2021, the drop in oil sales abroad is 11%.
The lower oil exports reflect, in part, the suspension of exports caused by a drastic drop in oil production due to the 18-day national strike in June 2022.
A total of 779 oil wells, which belong to Petroecuador, were turned off during the protests. In the country there are 2,220 wells owned by the state oil company and by foreign companies.
This led Petroecuador to declare force majeure for oil exports between June 30 and July 13, which included the rescheduling of oil deliveries to foreign oil companies such as Petrochina, a subsidiary of the Chinese state giant CNPC.
Rupture of oil pipelines
Another month of low exports was January. In the first month of this year, oil exports still suffered the effects of the rupture of the pipelines due to the regressive erosion of the Coca River, in the San Rafael sector, between the Amazonian provinces of Napo and Sucumbíos.
Regressive erosion is a phenomenon that causes the riverbanks to crumble, causing damage to oil and road infrastructure.
The Trans-Ecuadorian Pipeline System (SOTE), owned by the state oil company Petroecuador, and the private OCP suspended operations between December 9 and 31, 2021.
After overcoming that incident, the production began to gradually recover in January 2022.
Production does not take off
The national strike and power outages are not the only factors that affected the drop in oil exports.
In May 2022, the state oil company Petroecuador recorded power outages. The interruption of the electricity supply caused production drops in block 15 and the ITT, located in the Amazonian province of Orellana.
What’s coming
A scenario of low oil production contrasts with the Government’s goal of doubling oil production.
The Minister of Energy and Mines, Xavier Vera, said that daily oil production in 2025 will be 756,000 barrels per day and not one million barrels per day (including natural gas), as President Guillermo Lasso had promised.
The government and indigenous groups agreed to a moratorium or suspension of tenders in 16 oil blocks in Pastaza and Morona Santiago, in southern Ecuador, where there has not yet been any oil activity.
With the agreement, the government also committed not to expand oil blocks 14, 17, 61, 31, 43, 12 and 16.
The moratorium will be in force for at least one year, or as long as there is no law that regulates a prior consultation process for oil exploitation in these territories.
Ecuador expects to end 2022 with an oil production of some 540,000 barrels per day, according to Vera.
But even that goal seems difficult to meet. National oil production averaged 473,000 barrels per day between January and July 2022; that is, 5% less compared to the same months of 2021.
In addition, the Ministry of Energy confirmed that the tender for Campo Amistad is being postponed. It will take a year for the state oil company Petroecuador to organize the bidding process and the signing of the contract with a private investor to develop the natural gas field.
State oil company Petroecuador, which operates the field, had expected to award the Amistad concession contract on November 30, 2022. But it now plans to launch the tender later in the year and award the contract in August 2023, the energy ministry confirmed.
