Ecuador’s new government is ready to start negotiating a debt repayment of around US$1 billion with Schlumberger for oilfield services rendered to OPEC’s smallest member. According to the country’s new Oil Minister, Carlos Perez, as quoted by Reuters, the negotiations will focus on interest rates and partial repayments, as well as talk about additional investments.
Total debts that Ecuador owes various oilfield service companies stand at US$2 billion. The Lenin Moreno government is planning on redeeming this partly in cash and partly in government bonds.
Ecuador already paid a small part of its debt to Schlumberger, some US$150 million, in central bank notes that the company can use to pay taxes in Ecuador. Other types of bonds are also under consideration.
Besides Schlumberger, Halliburton and Sinopec also provide oilfield services to Ecuadorian operators, along with some local companies.
Schlumberger is ready to negotiate the debt, but it needs proof that the Ecuadorian government is indeed prepared to start repaying it, Reuters also reported.
Ecuador has proven reserves of around 4 billion barrels of oil as of mid-2016, worth around US$200 billion in potential revenue. A lot of this oil, however, is located in the Yasuni National Park, where drillers currently have no access.
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Still, Carlos Perez, who is a former Halliburton executive, said that Ecuador will boost its daily output to 700,000 bpd over the next four years, from 535,000 bpd at the moment. The country pledged to cut its production to 522,000 bpd as per the OPEC production cut agreement.
Although hit by the 2014 price crash, the country has benefited from a fall in production costs, which has brought breakeven levels down to an average of US$39. Thanks to this, Ecuador last year stopped incurring losses from its oil, as it sold at around US$49-50 for the light blend and US$40-41 for the heavy crude.
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.