The Government of Ecuador failed to attract any bidders for four blocks on offer in the Gulf of Guayaquil despite interest from several foreign oil firms. The licensing round was expected to bring in between $1 billion and $2 billion in investments over a period of 20 years.
Energy Minister Carlos Arboleda said that the bidding process would be reopened and that a new timetable would be made available shortly. Last week, Petroecuador had said that ConocoPhillips, Occidental Petroleum, Hunt Oil, Agip and Repsol-YPF had expressed an interest in participating in the licensing round. However, none of these companies submitted bids before the deadline.
Local analysts say that foreign companies are wary of investing due to a lack of safe guards for investors. Over the past several months, foreign oil companies have been disputing with the Ecuador internal revenue service over tax reimbursements. Occidental has initiated a process of international arbitration to recoup $60 million in value-added tax payments, while EnCana Corp. is doing likewise for $50 million.
Former energy minister Pablo Teran, for his part, said that the lack of bids could be a result of the government's announcement that the state would have a 40% stake in any of the projects. "There's no technical reason for this and the only thing it does, as was demonstrated, is drive off foreign interest, because it's not the same investing in an onshore block in the Amazon as it is in an offshore block in the Gulf of Guyaquil," he said.