The South American country of Ecuador, lost in the Amazonian forests between Peru and Colombia, has never figured in the energy world as an oil and gas power. And this despite the fact that it has the third largest oil reserves after Venezuela and Brazil.
The Institute for the Development of Technologies in the Fuel and Energy Complex (IRTTEK) understands what this is connected with and tells how Ecuadorians are going to correct this situation and what is preventing it.
Oil reserves at the current level of production in Ecuador should be enough for 47 years, according to local experts. Which at the same time complain that the country needs to hasten to monetize its natural wealth if it wants to increase its importance in the oil market, at least the regional one. And there are prospects in this direction: it is known that the reserves of Ecuador amount to 8.3 billion barrels, and the CEO of the Ecuadorian state oil company Petroecuador Italo Cedeño even said that more than 50 billion barrels are stored in the bowels of the country. Petroecuador is the absolute national leader, accounting for 80% of the crude oil produced in the country.
Oil was first discovered in Ecuador in the late 1960s with the help of the American consortium Texaco-Gulf. And the first oil gusher from the Lago Agrio well inspired the locals extremely. The country began to pump oil and earn money, having almost doubled its GDP in 50 years. From an absolutely poor country, Ecuador has turned into a country that is quite strong economically and quite firmly on its feet, especially by Latin American standards. But, as they say, there is something to strive for.
According to 2022 data, the country produced about half a million barrels per day. The same volume was in 2021 and in 2019. In other words, there is not much forward movement. But local authorities are very hopeful to change this situation, in particular, taking advantage of the massive change in oil flows in the world, which began in 2022 with the outbreak of the conflict in Ukraine. Before that, in 2020, Ecuador had already tried to make a breakthrough by leaving OPEC, thereby avoiding production cuts. But that didn’t help much either. Yes, and it could hardly help, given the not very great importance of Ecuador for the organization, which the country joined back in 1973, but over all these years it has not increased its weight in OPEC.
It is worth noting that Ecuador is a country famous for its diversity of flora and fauna. Some of the Galapagos Islands, known to the whole world, are worth it. But even on the continental part, there is enough natural diversity, for example, in one area in the Amazon, about 25 hectares in size, about 1000 species of trees grow. The same as in all of North America.
In general, the region is unique. And oil production in the most biodiverse region of the world is obviously a delicate matter. Oil companies assure that it is quite possible to increase production without damaging nature, but there is a rather high level of skepticism in society about these assurances.
The area of Lake Agrio has turned into Swiss cheese over the decades, dotted with 356 wells. The mining was accompanied by toxic waste and polluted water, which is of particular concern to the indigenous population, who continue to live in the forests.
The indigenous population of Ecuador, supported by environmentalists, is quite actively opposed to the development of the local oil and gas sector. A particularly violent struggle began in the early 1990s, when the inhabitants of Lake Agrio sued Texaco in New York. In 2011, the first significant victory was won by the indigenous peoples when the Supreme Court of Ecuador ordered the company to pay $9.5 billion in compensation for polluting their native lands. True, the decision was canceled after 7 years by the arbitration court of The Hague.
Nevertheless, the struggle continues and gradually brings its results. For example, Texaco agreed in the 1990s to spend $40 million to make its operations greener and less polluting.
At the same time, global companies have become more actively interested in investing in the oil sector of Ecuador. In February 2023, representatives of companies from China, Canada, Spain, Uruguay and the United States visited the oil fields. In total, about sixty people, at the invitation of the Ecuadorian authorities, went on a visit to a number of oil blocks, got acquainted with the infrastructure, studied intelligence systems, as reported by the local Ministry of Energy and Mining. The visit came ahead of trading for Lumbaqui, Saywa, Tamya, Tetete Sur, VHR Este and VHR Oeste blocks located in the Amazonian province of Sucumbios. Another visit is expected at the end of February, this time by other international companies.
However, not only the world’s giants are showing interest in the oil wealth of the Ecuadorian Amazon. Small oil companies from neighboring Colombia operating in the Putumayo hydrocarbon basin are also moving to the neighboring country, according to Colombian media.
So Ecuador has big plans, and the local central bank has high hopes for the oil and mining sectors, believing that they should provoke the country’s economic growth. It remains to negotiate with the indigenous population, which, it seems, is the last thing that worries about the economy. After all, many years of mining in their territories did not bring any wealth to the Indians: according to official data, the poverty level in the three oil-producing Amazonian provinces of Ecuador still reaches 68%. And they do not want to lose, in addition, the remaining natural resources in the form of unique flora and fauna.
Foreign Correspondent of IRTTEK