• 3 hours Iraq Struggles To Replace Damaged Kirkuk Equipment As Output Falls
  • 8 hours British Utility Companies Brace For Major Reforms
  • 12 hours Montenegro A ‘Sweet Spot’ Of Untapped Oil, Gas In The Adriatic
  • 14 hours Rosneft CEO: Rising U.S. Shale A Downside Risk To Oil Prices
  • 15 hours Brazil Could Invite More Bids For Unsold Pre-Salt Oil Blocks
  • 16 hours OPEC/Non-OPEC Seek Consensus On Deal Before Nov Summit
  • 17 hours London Stock Exchange Boss Defends Push To Win Aramco IPO
  • 18 hours Rosneft Signs $400M Deal With Kurdistan
  • 20 hours Kinder Morgan Warns About Trans Mountain Delays
  • 1 day India, China, U.S., Complain Of Venezuelan Crude Oil Quality Issues
  • 1 day Kurdish Kirkuk-Ceyhan Crude Oil Flows Plunge To 225,000 Bpd
  • 1 day Russia, Saudis Team Up To Boost Fracking Tech
  • 2 days Conflicting News Spurs Doubt On Aramco IPO
  • 2 days Exxon Starts Production At New Refinery In Texas
  • 2 days Iraq Asks BP To Redevelop Kirkuk Oil Fields
  • 3 days Oil Prices Rise After U.S. API Reports Strong Crude Inventory Draw
  • 3 days Oil Gains Spur Growth In Canada’s Oil Cities
  • 3 days China To Take 5% Of Rosneft’s Output In New Deal
  • 3 days UAE Oil Giant Seeks Partnership For Possible IPO
  • 3 days Planting Trees Could Cut Emissions As Much As Quitting Oil
  • 3 days VW Fails To Secure Critical Commodity For EVs
  • 3 days Enbridge Pipeline Expansion Finally Approved
  • 3 days Iraqi Forces Seize Control Of North Oil Co Fields In Kirkuk
  • 3 days OPEC Oil Deal Compliance Falls To 86%
  • 3 days U.S. Oil Production To Increase in November As Rig Count Falls
  • 4 days Gazprom Neft Unhappy With OPEC-Russia Production Cut Deal
  • 4 days Disputed Venezuelan Vote Could Lead To More Sanctions, Clashes
  • 4 days EU Urges U.S. Congress To Protect Iran Nuclear Deal
  • 4 days Oil Rig Explosion In Louisiana Leaves 7 Injured, 1 Still Missing
  • 4 days Aramco Says No Plans To Shelve IPO
  • 6 days Trump Passes Iran Nuclear Deal Back to Congress
  • 6 days Texas Shutters More Coal-Fired Plants
  • 7 days Oil Trading Firm Expects Unprecedented U.S. Crude Exports
  • 7 days UK’s FCA Met With Aramco Prior To Proposing Listing Rule Change
  • 7 days Chevron Quits Australian Deepwater Oil Exploration
  • 7 days Europe Braces For End Of Iran Nuclear Deal
  • 7 days Renewable Energy Startup Powering Native American Protest Camp
  • 7 days Husky Energy Set To Restart Pipeline
  • 8 days Russia, Morocco Sign String Of Energy And Military Deals
  • 8 days Norway Looks To Cut Some Of Its Generous Tax Breaks For EVs
Alt Text

Oil Prices Spike On Middle East Tensions

Oil prices jumped upwards on…

Alt Text

The U.S. Shale Play To Watch In 2018

The original U.S. shale gas…

Alt Text

Oil Prices Rise Amid Falling U.S. Rig Count

Oil prices inched higher on…

SRS Rocco Report

SRS Rocco Report

Independent researcher Steve St. Angelo (SRSrocco) started to invest in precious metals in 2002.  Later on in 2008, he began researching areas of the gold and…

More Info

Ecuador Gutted By Low Oil Prices: Rig Count Down To One

Ecuador Gutted By Low Oil Prices: Rig Count Down To One

There’s an ongoing catastrophe taking place in Ecuador. Not only has a significant part of its Amazon rainforest has been polluted by several oil spills, but the low oil price has totally gutted the oil industry.

This is a big problem for Ecuador because 50 percent of its exports and 30 percent of its government revenues come from oil. According to the article, Ecuador Reveals Pain Inside OPEC: It’s Pumping Oil At A Loss:

President Rafael Correa said on Tuesday that the South American nation is receiving as little as $30 a barrel for its crude, while production costs average about $39. The warning comes after several other members of the Organization of Petroleum Exporting Countries, including Algeria and Libya, said the group should consider holding an emergency meeting to respond to the drop in oil prices.

Related: T. Boone Pickens On Obama Oil Tax: ‘’Dumbest Idea Ever’’

Ecuador was receiving as little as $30 a barrel back in August 2015 when that article was written. However, today it’s likely getting a price closer to $20 for a barrel of oil. If Ecuador was in serious trouble last year due to low oil prices, the situation today is nothing short of a catastrophe for its oil industry and economy.

Even though Ecuador isn’t a large producer of oil, it produced a little more than 556,000 barrels a day (bpd) in 2014, while total consumption was 259,000 bd. Thus, it exported nearly 300,000 bpd in 2014. Here is a chart of Ecuador’s net oil exports since the 1970’s:

Related: Rising OPEC Oil Production Worsens Glut

What is interesting in the chart above is the increase in Ecuador’s domestic oil consumption. While production has increased significantly since the 1970’s, so has consumption (black line). Ecuador’s total production increased from 200,000 bpd in the 1970’s, to 556,000 bpd, however net exports (green) did not increase all that much due rising domestic consumption.

The Collapse Of Ecuador’s Drilling Rig Industry

While the drilling rig count in the U.S. and world has fallen considerably over the past 18 months, nothing can compare to the collapse that has taken place in Ecuador. When oil was trading over $100 in August 2014, Ecuador had 27 drilling rigs working in the country. Today… they have one:

Thus, the low price of oil has totally gutted Ecuador’s drilling rig industry…. a 96 percent collapse in just 18 months. Again, the reason for the huge decline in Ecuador’s drilling rig industry has to do with simple economics–you can’t continue producing something as a loss, especially at a huge loss. Related: France To Build 621 Miles Of Solar Roads

According to the article, Ecuador: A Nation Of Oil No Longer:

In 1972, the military Government of General Guillermo Rodríguez Lara instigated a mini oil boom. In Quito, his regime exhibited the first barrel of oil produced by a consortium between transnational Texaco and the fledgling Ecuadoran State Petroleum Corporation (CEPE for its Spanish acronym). Nearly half a century later, the Government of Rafael Correa Delgado ends the extractive cycle, squeezing the last drops of black gold from the earth. The depletion of Ecuador’s crude reserves, combined with the collapse in oil prices, spells economic tragedy for a country that has tied its fate to hydrocarbons. In 2015, at an average price of $50 per barrel, the situation is catastrophic. The country expects to make $9.942 billion from oil exports and derivatives, but production and import costs of $10.145 billion leave a shortfall of $226 million.

Unfortunately, for Ecuador, it’s now receiving a price closer to $20 a barrel. This is the reason the country only has one lousy drilling rig.

While Ecuador’s oil troubles are worse than other oil exporting countries, due to shortsighted government energy policies. At this point, it looks like it could get quite a lot worse for Ecuador before it gets better. For now, it seems the only thing Ecuador can do is join Venezuela’s call for an emergency OPEC meeting in the hope that oil prices will recover.

By SRS Rocco Report

More Top Reads From Oilprice.com:




Back to homepage


Leave a comment
  • @kaptainmirza on February 12 2016 said:
    Equador's call's for an emergency meeting might not happen, as its monetary standing is not authoritative. So they suffer and suffer alone.
  • Russian Jew on February 12 2016 said:
    Those who can't produce oil competitively should either not produce oil at all, or produce it for internal consumption only. And I thought Americans believe in a free market ..
  • Jorge Rosas on February 14 2016 said:
    Dear sirs,
    I don´t know who gave to you and your sources that "Ecuador rig count information". As everywhere, in Ecuador there´s a dramatic reduction of drilling activity, however, your data are far from teh reality. I´have performed during more than 20 years a monthly rig count in Ecuador. If you need more detailed information , pelase contact me. It´s important that you evaluate this inofrmation, and correct your mistake

Leave a comment




Oilprice - The No. 1 Source for Oil & Energy News