Ecuador selects OCP to build $1.1 billion crude pipeline

By an OGJ Online Correspondent

QUITO, Feb. 19
�Ecuador has selected the OCP Ecuador SA consortium to build a proposed $1.1 billion export crude oil pipeline.

Williams had also submitted a proposal. Originally, the decision was expected last year (OGJ Online, Dec. 4, 2000, p. 30).

The 450,000 b/d capacity line will mostly parallel the existing 311-mile SOTE crude pipeline�which is operating at capacity of 380,000 b/d�with a "considerable" deviation north of Quito, up to Quinind�in the coastal plain.

Ecuador's President Gustavo Noboa said the new line could allow the country's oil output to double to 800,000 b/d by first quarter 2003. For some time, field development plans have been in limbo due to lack of transportation capacity.

This additional available capacity will spur oil production and exploration in the country. Blocks that have so far remained closed to exploration will be offered on new bidding rounds, and several other projects such as the joint ventures, the strategic alliances, and the Ishpingo-Tiputini-Tambococha program may well be carried out by Petroecuador.

OCP Ecuador is made up of five oil companies that produce crude oil in the Oriente basin and engineering company Techint SA of Argentina. The producers are Occidental Ecuador Inc., Alberta Energy Co., Kerr-McGee Corp., Repsol-YPF SA, and Agip SPA.

The line should be built within 25 months of signature; physical work will begin within the first 90 days�after completion of an environmental study and administrative procedures.

Concession contract is for 20 years, to be adjusted according to an amortization schedule over the years. It was not disclosed whether the pipeline will revert to the state when the pipeline is fully amortized.

The OCP line will have capacity to carry 450,000 bbl of 16-22� API crude. It will be open to transport crude oil from Petroecuador or any other company, as oil development in the Oriente basin continues.

Currently the five companies that will use the OCP produce about 120,000 b/d, pumped through the SOTE pipeline. When OCP starts operations in 2003 all this crude will be shifted to OCP, and will be pumped to Balao together with additional production, up to 450,000 b/d. Of this amount, 25% will belong to the state, as its share in the production.

In its deviation to Quinind�the new pipeline will cross environmentally sensitive areas in the western foothills of the Andes, a matter of much concern to several groups and communities located in those areas.

At the maritime terminal at Balao, there will be five 750,000-bbl tanks for crude storage and two loading submarine lines with a flow capacity of 60,000 bbl/hr. Two mooring systems can receive tankers of up to 130,000 dwt and 250,000 dwt.

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