QUITO – Ecuador has signed contracts for $1.7 billion in investment – the biggest to date in the country’s oil sector – to boost output at a pair of mature Amazon fields.
Non-Renewable Natural Resources Minister Wilson Pastor, speaking at a signing ceremony at the presidential palace in Quito, described the fields as Ecuador’s “crown jewel.”
The 15-year incremental production contracts with two consortiums are aimed at raising production by 16,600 barrels per day and increasing government revenues by nearly $3.53 billion.
The agreements cover the Shushufindi-Aguarico and Libertador-Atacapi fields, which are in decline and require new technology to improve output.
President Rafael Correa presided over the ceremony, in which Petroecuador head Marco Calvopiña and the representatives of the two winning consortiums inked the deals.
“It’s not true. It’s a new calumny, the same as always, to try to inflict damage on the government, to immobilize the country, (to suggest) the oil is being delivered to private hands,” Correa said at the signing ceremony.
Petroecuador will continue to operate and manage the fields, while the service contractors will receive a fixed price tariff for each incremental barrel produced.
The consortiums will only receive payment for production that exceeds the base curve established in their respective contracts.
The Shushufindi S.A. consortium, composed of oilfield services giant Schlumberger, Argentina’s Tecpetrol and U.S. firm KKR, was awarded the contract for the Shushufindi-Aguarico field, which produced 110,000 barrels per day in 1992 and is still one of Ecuador’s largest.
The consortium will invest nearly $1.3 billion to raise production at that field from 43,000 bpd to 60,000 bpd and thus recover nearly 69 million barrels of crude.
The Pardaliservices S.A. consortium, which comprises Tecpetrol, Canada’s Canacol Energy, Schlumberger and Ecuador’s Sertecpet, will work the Libertador-Atacapi field.
Those companies will invest more than $380 million to lift output from 16,200 bpd to 16,400 bpd and recover more than 14 million barrels of oil.
Ecuador, the smallest member of the Organization of Petroleum Exporting Countries, currently produces some 500,000 barrels per day of crude, its main export product, but based on current reserves output will decline steadily after peaking in 2013.
Petroecuador, therefore, is especially interested in an exploratory well in the pre-Cretaceous layer that was included in the contracts signed Tuesday.
Drilling at that well will reach depths of 5 kilometers (3.1 miles), well below the normal 3-kilometer limit and the deepest ever explored in Ecuador.
“Due to similarities with structures found in neighboring countries, we’re very confident that significant reserves can be found at that level,” Calvopiña said after the signing ceremony.
If drilling at that depth proves successful, “the magnitude of reserves that may be discovered will change the country’s oil horizon,” Correa said. EFE