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Ecuador and Chinese oil companies have reached a partial agreement on exports from the Andean country, but Quito will continue to insist on better conditions, the country’s Hydrocarbons Ministry said in a statement cited by Reuters.
The Chinese companies discussing Ecuadorian oil purchases are PetroChina and Unipec Asia, and they have been buying half of the oil Ecuador produces for years under an oil-for-loans scheme. Now, the new president of the country, Lenin Moreno, wants to change this scheme, which critics have blasted for being too taxing on Quito and harmful to the competitiveness of Petroecuador.
The current government argues that the terms of the old oil-for-loans contracts are inadequate and a new price formula needs to be agreed. It has been, according to the latest statement from the ministry, as have transport costs.
Ecuador recently greenlit the second phase of an oil project in the Yasuni National Park. Local Petroamazonas plans to drill 97 wells in an oil field there, starting with the Tambococha-2, which would give it access to an estimated 287 million barrels of crude oil as part of the Ishpingo-Tambococha-Tiputini project.
Naturally, the project has met with vocal environmentalist opposition as the Yasuni Park is one of the most biodiverse places on the plant. Moreno’s government has pledged to keep the environmental impact of the ITT project to a minimum by combining smaller platforms with clustered wells and re-using gas and water used in the wells.
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The project is economically important for the cash-strapped Andean nation: from 2022 onwards, after the ITT begins full-scale production, the Moreno government expects to start raking in US$2.4 billion annually.
The previous president of Ecuador tried an unorthodox approach to the Yasuni issue: ten years ago, he challenged the world to donate US$3.6 billion to compensate for revenues lost with non-drilling in the national park. Only 4 percent of that was donated within six years, so Correa scrapped the plan and authorized drilling.
By Irina Slav for Oilprice.com
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Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry.