(Reuters, 11.Mar.2021) — Ecuador has reached a preliminary agreement with a unit of Thailand’s state-run PTT PCL to extend to 2024 the payment period of an oil-for-loan agreement that was originally planned to be fully paid through 2022, the country’s energy minister said on Thursday.
State-run oil company Petroecuador was expected to deliver up to 85 million barrels this year to PTT and PetroChina to amortize loans extended by the companies to the nation over the last decade.
But making those deliveries would have made it difficult for Ecuador to fulfill other long-term commitments, minister Rene Ortiz told Reuters in an interview.
The renegotiation with PTT, which is not expected to imply an adjustment of the loan’s interest rate, would leave room for Petroecuador to refine a portion of the nation’s oil output, export up to 10% through the spot market, and honor supply contracts with customers including Royal Dutch Shell and Phillips 66.
If the proposed deal is signed this year, PTT and PetroChina would jointly receive up to 77 million barrels of Ecuadorian crude per year through 2024, Ortiz said.
“(This) would ease our commitments and improve Petroecuador’s capacity to sell directly to other buyers and fulfill spot sales,” Ortiz added.
Ecuador still has to deliver over 230 million barrels of oil to PTT and PetroChina to fully repay the loans. A similar refinancing agreement with PetroChina is not currently on the negotiating table, Ortiz said.
The minister also said that Ecuador is not yet negotiating a reparation pact with trading firm Vitol after a unit of the company agreed to pay a total of $164 million to resolve an investigation by the U.S. Justice Department over bribery in the region. In Mexico, Vitol has offered over $30 million in compensation to state oil firm Pemex.
“At some point we’ll have to reach a level of understanding between the parties,” he said, adding that Vitol has remained out of Ecuador’s oil tendering activity in the meantime.
Ecuador seeks to award energy projects in the coming months to secure upstream investment now that it is fetching $61-$65 per barrel for sales of its Napo and Oriente crudes.
The Andean nation’s output declined almost 10% to some 479,250 barrels per day (bpd) last year, mainly due to pipeline interruptions, according to figures provided by the energy ministry to Reuters.
The government has began receiving offers for the flagship Sacha oilfield – where production is expected to grow from its current level of 68,000 bpd of crude to 85,000 bpd once in private hands – as well as the TermoGas project to reuse Petroecuador’s increasingly idled infrastructure for supplying natural gas to factories.
The final contracts are set to be signed by the next government after the second round of the presidential election in April, to be contested by leftist economist Andres Arauz and conservative banker Guillermo Lasso.
Besides a separate marine terminal, a solar power project and a wind farm, Ecuador also expects to transfer its 110,000-bpd Esmeraldas refinery to private operation.
A consortium including U.S. firm KBR and South Korea’s Hyundai Engineering Co. is expected to submit an offer “in the coming days” for refurbishing, modernizing and operating the facility in a $3 billion project, Ortiz said.
“Ecuador is a dollarized economy, resting on three pillars: direct foreign investment, exports and foreign debt,” Ortiz said. “The next administration, from any political side, will be interested in continuing with these processes.”
Reporting by Marianna Parraga in Mexico City; additional reporting by Alexandra Valecia in Quito; Editing by Luc Cohen, Matthew Lewis and Rosalba O’Brien