U.S. refiners were forced to source their heavy crude from somewhere else after the United States sanctioned Venezuelan crude oil. Now, U.S. refiners may again be forced to resource crude oil as French bank Natixis stops funding the Ecuadorian oil trade.
So far, six European banks have been called out for financing the trading of crude oil from Ecuador. Concerns have been raised that the oil industry has encroached on indigenous territories in Ecuador, including in the Amazon—the world’s largest rainforest.
Natixis, according to Reuters, amended its official policy on Ecuador’s crude oil trade on April 7, reducing the volume of crude it finances this year, and stopping all financing of Ecuador’s crude oil by this time next year.
The United States imported 67.9 million barrels of crude oil from Ecuador in 2020, down from 74.6 million barrels in 2019, according to EIA data. According to data from Stand.earth and Amazon Watch cited by Reuters, Natixis financed cargoes of 5.5 million barrels from the Amazon in the last six months of 2020.
Other banks previously announced that they, too, would stop financing the trade of Amazonian crude, including BNP Paribas, Credit Suisse, and ING.
The news comes as the United States already had to replace the volume of heavy crude oil that it was purchasing from sanctioned Venezuela, which in 2015 was 301.9 million barrels, according to the EIA. The United States’ 2020 crude oil imports from Venezuela was brought down to zero.
The oil sector accounts for more than half of Ecuador’s export earnings, according to OPEC. Ecuador was a member of OPEC until last year. The country’s oil nationalism and failing state of its oil pipelines have come under scrutiny, and it has failed to attract the foreign players that its industry requires.
Ecuador produces half a million barrels of crude per day, and much of what it exports to U.S. refineries is of a heavy sour variety and was considered as a substitute for Venezuelan crude.
By Julianne Geiger for Oilprice.com
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