The Esmeraldas Refinery will stop 54 days from next March. The cause? Repair the failures of several of its components, including the Fluidized Catalytic Fractionation Unit (FCC), a fundamental part of its operation.
The stoppage is intended to repair the damage to equipment that was part of the rehabilitation plan that ended in 2015 and was executed by the previous administration. For these repairs, the country will lose $ 37 million, which means $ 741,000 a day, according to the Ministry of Energy and Non-Renewable Resources.
The Esmeraldas Refinery processes Ecuadorian oil to serve the domestic market for fuels with liquefied petroleum gas, gasoline, diesel and jet fuel. It currently processes 102,000 barrels of crude when its capacity is 110,000 barrels. With the programmed stop only part of the damage of the work that operates at 90% will be corrected. For it to work 100%, eight projects are needed that will cost $ 172 million.
To that conclusion came the Spanish consortium ICC – Tecnatom that evaluated the work. His consultancy was endorsed by the United Nations Development Program (UNDP) and his report was presented by the Government on December 7. The firm confirmed some of the technical failures already detected by the Ministry of Energy and Non-Renewable Resources and a special review of the Comptroller’s Office in 2017.
The need to rehabilitate the refinery was born in 2005 when its processing capacity had fallen to 85%. The implementation of this plan was postponed and the initial budget went from $ 127 million to $ 755 million in 2011. The repowering finally started in 2008 and ended seven years later with a final expense of $ 1,223 million.
At that time, Vice President Jorge Glas, accompanied by former Minister of Hydrocarbons, Carlos Pareja Yannuzzelli and Álex Bravo, who at that time was manager of Petroecuador, assured that the work operated at 102%.
The ex-officers are now being prosecuted by the country’s justice system. Parallel to the Rehabilitation Program of the Esmeraldas Refinery, Petroecuador’s Refining Management executed the Plant Maintenance Program for $ 1,100 million, whose evaluation was beyond the scope of ICC-Tecnatom.
Both programs add up to $ 2,223 million. The lack of a master plan that incorporates all areas of the refinery and the absence of planning generated the cost overruns, says the evaluation firm. The rehabilitation did not resolve the faults of the work, including the Crude 2 Unit, which operates at 85% capacity due to structural damage.
The FCC Unit presents technical damages and detachment of the protective materials. In order to counteract the damage caused by temperatures above 500 degrees centigrade, steam lances are implemented. Its repair was budgeted at $ 370 million, however its final price was $ 680 million.
The final prices surpass the average of the international market. The Sosa Gastada plant (chemical used in the industry) is also not operational and the economic deviation was 121%. The summary presented by the Ministry of Energy and Non-Renewable Resources also says that in the repair of the electricity system the 1.156% of surcharge is registered and, in spite of that, it does not work.
In the repowering project, the improvement of the quality of fuels and important complementary works such as the sulfur processing unit and the rehabilitation of catalytic units 2 and 3 were not considered. The evaluating company points out that the refinery’s operational strategy does not responds to international standards and leaves behind environmental, safety, health and other aspects.
Another aspect that gave rise to the cost increase was the contracting under special regime. Only 1% of the contracts were awarded by tender or contest. The Spanish consortium suggests that the next hiring will be done under this last modality because equality, competitiveness, better cost and transparency prevail between contractors and contractors.
The ministry of the branch has already started the pre-contractual process of the new sulfur plant, the export of caustic soda and will start the plant for its treatment. (I)