Ecuador Energy Ministry to Publish Pipeline Study July 21-25

Ecuador's energy ministry plans to publish a study next week showing that shipping 75,000 barrels a day (b/d) of state oil company Petroecuador's heavy crude through the OCP pipeline is economically and technically preferable to using the Sote pipeline, a ministry source told BNamericas.

The OCP is the better option " because the OCP is designed for this, and secondly because the government has a preferential rate," the source said. Transport costs for private companies on OCP are about US$2 a barrel, and the government would have a preferential rate of US$1.50-US$1.75/b, which is still more expensive than the Sote cost of about US$0.35/b.

In May, Petroecuador said it would not use its reserve capacity on the more expensive OCP, which will be predominantly used by private sector oil companies, and would ship both heavy and light crude through Sote. However, energy minister Carlos Arboleda recently reversed this decision, saying it is "not convenient" to mix heavy and light crude in the same pipeline.

The ministry source denied that the real reason for the change in policy is that the government is concerned private companies will not produce enough oil to fill the US$1.3bn OCP when it starts operations in October. The OCP "will start with 170,000b/d plus 75,000b/d from the state, so we are talking about 250,000b/d more or less, which is about 75% [of the pipeline's 390,000b/d capacity]," the source said. By 2004 the OCP should be transporting 350,000b/d, the source said, adding that it would not be ideal to have both pipelines at maximum capacity, because that would discourage further exploration.

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