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The Next South American Oil Giant

The Next South American Oil Giant

Closely following the developments at…

Ecuador, Peru To Join Forces On Shared Oil, Gas Fields

Ecuador and Peru may jointly explore oil and gas resources that the two neighboring countries share, Reuters reports, citing Ecuador’s energy minister, Carlos Perez. Perez also said that the partnership could involve Ecuador’s state oil and gas company Petroamazonas operating gas fields in Peru.

“We could form a joint venture between (state-run oil firms) Petroamazonas and Petroperu plus a private company to bring in capital,” the official told Reuters in an interview.

Ecuador has been eager to attract more private investment into its oil and gas industry in a bid to boost production, which has been in decline recently. Although not a major producer—it is OPEC’s smallest member—the Andean nation has plans to raise its daily total to 590,000 bpd next year from the current 520,000 bpd. It also plans to speak in support of higher overall OPEC production at the cartel meeting this December.

“Due to national interest, Ecuador wants to have the option of being able to increase production. That will be our point of view (in the upcoming OPEC meeting),” Perez said.

Peru is an even smaller producer, pumping about 50,000 bpd as of April this year, but it has ambitions to grow its output, like its neighbor. To this end, the state oil company has been raising financing through bonds. In 2017, it raised US$2 billion in a 30-year issue, and it plans to sell another US$600 million in 2019. This money will be used to upgrade its biggest refinery, Talara. The oil Petroperu and Petroamazonas plan to produce from their shared fields will be fed into that same refinery, which has a capacity of 65,000 bpd.

The two companies will also partner on natural gas with gas pumped in Peru to be sent to Ecuador, which is suffering a shortage of the fuel.

By Irina Slav for Oilprice.com

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