An additional 3500 million dollars will be received by Ecuador for the renegotiation of contracts

Tuesday, May 22, 2018

Press release from the Ministry of Hydrocarbons

The Ecuadorian Government will receive an additional USD3.5 billion for the renegotiation of long-term contracts for the sale of crude oil that the country has with Petrochina International Co. Ltd. (Petrochina), Unipec Asia Co. Ltd. (Unipec) and PTT International Trading Pte. Ltd. (PTT). This was announced today by Minister Carlos Pérez during his conversation with the media in Quito to discuss management in the hydrocarbon and electricity sectors.

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The Secretary of State said that the negotiations with the Asian oil companies reached good terms, allowing the release of 50 million barrels of oil for the realization of new spot sales. "The road has been long in these negotiations, but fruitful, because we reached agreements according to the prices of the international oil market, safeguarding the interests of the Ecuadorian State," said the Minister.

Additionally, it will receive around USD 561 million for adjustments in the contracts in four aspects: price formula, quality adjustment with the Coque factor, freight factor and increase in current prices.

From the second semester of 2017, the National Government, through the Ministry of Hydrocarbons and EP Petroecuador began the process of negotiations with Petrochina, Petrotailandia and Unipec, in Houston - Texas, through dialogue tables, made up of technical teams from each of the parties, where the contractual conditions established in these contracts were reviewed. These negotiations culminated on good terms, last April.

As part of these measures, EP Petroecuador signed an agreement with Petroperú to create a direct commercial relationship by eliminating the intermediation, through the FOB delivery of a total volume of 2.88 million barrels of grade 24 API oil, provided for in eight cargoes of 360 thousand barrels each. The first shipment was delivered on May 21.

Regarding the price of oil, Minister Pérez explained that between May 2017 and April 2018, the average value of the WTI crude oil price was USD 71.90; while the General State Budget established it at USD 41.92 per barrel. This difference has meant that Ecuador receives additional income for USD 968,655,283.14. Income that has entered the Treasury.

Advances in the hydrocarbons sector

Regarding the new investments, the Hydrocarbons Owner indicated that the Ecuadorian Government, through the Hydrocarbons Secretariat, has closed negotiations with the Enap-Sipec company for the additional investment of USD 65 million. He also spoke of the new bidding rounds: Intracampos and Suroriente, the Campos Oil & Gas process and the Manabí refinery that will bring resources to the sector through private investment.

On the technical evaluation carried out by the United Nations Development Program (UNDP) to five projects in the hydrocarbon sector, the Minister said that so far there are 32 international companies interested in the process and that once the process of selection, they will have 60 days for the evaluations to each of the projects.

Electric sector

Minister Perez informed that the Comptroller General of the State will audit and carry out special examinations on the contracts of the eight electric sector projects, denominated emblematic (Coca Codo Sinclair, Delsitanisagua, Manduriacu, Mazar Dudas, San Francisco Mines, Quijos, Sopladora, Toachi - Pilatón) in order to know the real situation of each of them and draw a worksheet through a comprehensive plan, which will consider the work to be done, the execution of guarantees and sending information to entities of control. For the next week a technical tour with means of communication is planned for the Coca Coco Sinclair hydroelectric project.

This press release was published using an automatic translation system.