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Ecuador’s state oil company Petroamazonas plans to clear its US$850-million remaining debt to oilfield service giant Schlumberger by the end of this month. The company has US$300 million in outstanding debt to Schlumberger and will now pay US$100 million in cash by the end of the month. The rest will be paid in installments over a period of five years, Petroamazonas said.
Talks on the repayment of the debt began earlier this year, after the change of government in OPEC’s smallest member. At the time, Ecuador’s total debts to oilfield service provider stood at US$2 billion. Half of this was owed to Schlumberger but Petroamazonas made a US$150 million quickly after negotiations started.
Earlier this month, Ecuador made another US$300-million payment to Schlumberger, the funds for which it generated with a bond issue.
Ecuador has proven reserves of around 4 billion barrels of oil as of mid-2016, worth around US$200 billion in potential revenue, with Brent at US$50 a barrel. A lot of this oil, however, is located in the Yasuni National Park, where drillers currently have no access.
The smallest OPEC member caused its biggest co-members some worry in July, when it pulled out of the production cut deal that OPEC, Russia, and almost a dozen other oil producers struck at the end of last year.
"We need funds for the fiscal treasury and for that reason we've taken the decision to gradually increase production,” Ecuadorian oil minister Carlos Perez said, according to Reuters. Ecuador is running a fiscal deficit equivalent to 7.5 percent of GDP. Low oil prices are really hurting government finances, and production restrictions only add to the pain.
Later Ecuador returned to the agreement, but has been urging the cartel to raise its quota and has disputed secondary source production figures, claiming it was producing less than these sources calculated. Most recently, the Andean country has asked for an exemption from any further cuts. Average production stands at between 509,000 and 536,000 bpd – the former figure stated by Oil Minister Carlos Perez and the latter from OPEC secondary sources.
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.