Europe is facing a massive…
The dramatic recovery in oil…
Ecuador's state-run oil company, declared on Wednesday a force majeure on all oil trading operations, according to an evening Tweet by Petroecuador, citing mass protests that have disrupted the country's oil industry.
Petroecuador also said that it had completely shut down the TransEcuadorean Pipeline System known as SOTE, which normally carries 360,000 barrels per day, because it does not have enough oil to move through it.
The force majeure will last as long as the protests continue, Petroecuador claims.
Thus far, the protests have disrupted more than 200,000 barrels of oil production, creating a loss of $12.8 million.
Ecuador, who exports 315,000 bpd, currently has contracts with Chile, PetroChina, Unipec, and PetroThailand according to TeleSUR, but its larger clients include Chevron, Valero, and Marathon Petroleum Corp—Ecuador’s largest customer. Marathon purchased 59,000 bpd from Ecuador in July.
The protests, which were sparked in part by high fuel prices, have drug on for a week, and Ecuadorian President Lenin Moreno is hoping to settle the matter through dialogue with the country’s indigenous population. But so far, the interaction between the protestors and security forces in the country have resulted in violence.
But what the protestors want is the return of fuel subsidies, which Ecuador canceled in a deal it made with the IMF to secure more than $4 billion in funding. Fuel prices have seen increases of up to 120 percent when the end of the subsidies came into effect earlier this month.
State-run Petroamazonas suspended production at three oilfields earlier this week, also due to the same protests.
Ecuador, who boasts crude oil reserves estimated at 8.27 billion barrels, also announced earlier this month that it would be leaving OPEC as of January 1, 2020 due to its tough economic situation.
By Julianne Geiger for Oilprice.com
More Top Reads From Oilprice.com:
Julianne Geiger is a veteran editor, writer and researcher for Oilprice.com, and a member of the Creative Professionals Networking Group.