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In a bold effort designed to stimulate economic growth by increasing oil production, the government of Ecuador withdrew from the Organization of Petroleum Exporting Countries (OPEC) in 1992. Concurrently, foreign oil companies initiated efforts to accelerate exploration and increase oil production, while continuing to lobby for improvements to the existing petroleum legislation. In November 1993, President Sixto Duran and the National Congress of Ecuador approved a bill which outlined reforms to the Hydrocarbon Law, designed to stimulate growth in the oil and gas sector, increase private sector investment, and improve existing laws governing protection of the environment.
To year-end 1995, the changes to the Hydrocarbon Law have resulted in only a moderate improvement in the financial attractiveness of investments in Ecuador’s petroleum sector. However, the provisions for contract modifications for heavy oil discoveries, or for lighter oil discoveries in existing fields, may have a beneficial impact on project economics.
The United States Geological Survey estimates Ecuador’s proven and undiscovered oil reserves are approximately 2.5 and 2.6 billion barrels respectively. Based on current levels of oil production, the country has a reserves life index of 19 years. Proven and undiscovered gas reserves are 4.1 TCF and 6.1 TCF, respectively. With the exception of the offshore Amisitad gas field in the Guayas Basin, all of the gas being produced is associated or solution gas, and most is being flared.
The Oriente Basin, covering an area of approximately 100,000 km2, is the most prolific hydrocarbon producing area in the country, and will probably provide the majority of future oil additions. The oil-producing Santa Elena Basin is at a mature stage of exploration/development, and given the variable nature of reservoir quality and distribution, should be considered high risk.
In early 1994, Petroecuador held its first licensing round, incorporating the new production sharing contract terms. The government offered 13 blocks located in the onshore Oriente and onshore/offshore Santa Elena/Guayas Basins, but received only US$185 million for bids on eight blocks, far short of the expected US$2.8 billion. Subsequent licensing rounds were held, culminating in the 8th round in mid-1995.
For more information contact:
Petrel Robertson Consulting Ltd.
500, 736- 8th Avenue S.W.
Phone: (403) 218-1618
Fax: (403) 262-9135
This summary, part of Petrel Robertson’s 1995 summary of exploration and development opportunities in 31 countries around the world, has not been updated. Some of the information, particularly relating to political and economic issues, is thus out of date. It is included, however, to demonstrate the breadth and depth of Petrel’s work in each of these nations.