PETROECUADOR POISED FOR BROADER OIL ROLE

A little more than a year after its restructuring, state owned Petroleos del Ecuador is poised to play a broader role as oil operator in Ecuador. The new Petroecuador, consisting of several independent units and a central governing body, has expanded its involvement in all phases of the industry, from exploration and production to transportation, refining, and marketing. Petroecuador hiked its initial budget for 1990 by about 30% from 1989, with added investment primarily earmarked for

Jan. 14, 1991

4 min read

A little more than a year after its restructuring, state owned Petroleos del Ecuador is poised to play a broader role as oil operator in Ecuador.

The new Petroecuador, consisting of several independent units and a central governing body, has expanded its involvement in all phases of the industry, from exploration and production to transportation, refining, and marketing.

Petroecuador hiked its initial budget for 1990 by about 30% from 1989, with added investment primarily earmarked for exploration and production.

However, owing to a need for a general cut in public spending, the state company's budget was trimmed about $80 million in second half 1990.

This reduction was not expected to affect exploration and production.

CURRENT E&P

Petroecuador's activities in exploration and production are now carried out through Petroproduccion and Petroamazonas.

Petroproduccion operates fields in the norther sector of the Oriente basin: Bermejo, Libertador, Tetete, Shushuqui, Sansahuari, Cuyabeno, and Frontera.

Petroamazonas has taken over Texaco Inc.'s role as operator of the Shushufindi area. The two units will be merged in 1992, when the association with Texaco concludes (OGJ, Aug. 6, 1990, p.34). In first half 1990, Petroproduccion spent about $35 million for seismic work-including acquisition, processing, reprocessing--one wildcat and 14 development wells, and production equipment and pipelines.

Fields operated by Petroproduccion will sustain a daily production of about 65,000 for the next two or three years. Petroproduccion also will provide technical support during negotiations with oil companies operating in the country under service contracts.

Petroamazonas has operated the Petroecuador-Texaco block since July 1990. Since takeover, production has increased 15,000 b/d to about 225,000 b/d. This output will be maintained the next 2 years. Two new workover rigs are in operation in the area trying to activate some of the 51 wells out of service.

More than 317 wells have been drilled on the block.

Petroamazonas drilling plans for 1991 and 1992 provide for wildcats close to production: Palanda and Conga, south of Yuca field, Anaconda, west of Yuca, Pindo, east of Auca, and Palo Rojo, north of the consortium area. Petroecuador will assume all costs for the wildcat program. Seismic work related to the wildcat program is to start soon under contract with Seiscom Delta.

Preliminary steps for transfer of Texaco's activities in the consortium when the contract ends in 1992 have begun with some auditing on inventory and ancillary technical and financial matters.

These measures won't preclude Texaco's right to bid on the tender for a major enhanced oil recovery project in giant Shushufindi field, to go out early this year (OGJ, June 4, p. 26).

Crude produced by Petroproduccion and Petromazonas-Texaco will continue to be carried by the Lago-Agrio pipeline, operated now by Petrotransporte, another unit of Petroecuador.

CURRENT REFINING-MARKETING

Petroecuador's role in Ecuador's refining sector expanded with its takeover of what had been the last privately owned refinery in the country: a small topping plant in Santa Elena Peninsula, close to the Anglo refinery.

With this acquisition, made in 1989, Petroecuador's refining capacity rose to 140,000 b/d. Petroecuador also operates two small refineries at Santa Elena, the 90,000 b/d Esmeraldas refinery, and the 25,000 b/d Shushufindi refinery.

Petroecuador exports diesel, gasoline, and fuel oil.

After Iraq's invasion of Kuwait, Ecuador decided to increase production by 15,000 b/d to about 300,000 b/d.

Petroecuador also changed its formula for pricing Oriente crude, which had been pegged exclusively to Alaska North Slope (ANS crude delivered to the Gulf of Mexico.

Petroecuador figures in as much as 60% of the price of West Texas sour-the balance ANS-into its price for the Oriente benchmark. The formula applies for cargoes delivered into the U.S. Gulf and cargos delivered into California with minor differences for freight. The modification of the pricing system has not affected the flow of oil from Balao port.