Ecuador to fund construction of new transmission system for oil sector

The government of Ecuador will make funds available to private companies for the construction of $1.9bn worth of new energy facilities, including a new transmission system for the oil sector.

The funds will enable companies to build and operate new power plants, Energy Minister Juan Carlos Bermeo said last week. “We ratify our openness to responsible investors,” Bermeo was quoted by Reuters as saying during a presentation of the new projects.

According to the minister, the government is seeking investors for several major projects. Among these are a new 400-MW natural gas-burning thermal power plant (TPP) worth $600mn and a 290-km power transmission line that will link oil industry facilities to the national grid, he said. The new TPP and cable are expected to begin operating between 2024 and 2026, he added.

Ecuador’s government is currently making a push to expand the role of private investors in key sectors of the economy, in line with the policies favoured by President Guillermo Lasso, who took office in May. This includes the hydrocarbon industry, as crude oil is traditionally the South American country’s biggest export. Ecuador’s economy took a significant hit last year, owing to the drop in world crude prices and the decline in energy demand that resulted from the coronavirus (COVID-19) pandemic.

Currently, the country is producing around 530,000 barrels per day (bpd) of crude oil. State-run Petroamazonas, an upstream-focused division of the national oil company (NOC) Petroecuador, accounts for approximately one third of the total.

For its part, Petroecuador exports an average of 180,000 bpd of crude. Around two thirds of these volumes, or 120,000 bpd, are Oriente grade, a high-quality crude extracted from fields in Ecuador’s Amazon region.

China became one of the main destinations for Ecuadorean crude after 2009, when state-run PetroChina first offered Petroecuador $1bn in financing. This deal was followed by a landmark $2bn agreement in 2012, under which Beijing agreed to provide Quito with $2bn in energy financing in exchange for receiving as much as 90% of Ecuador’s oil exports each year.