$1B of Investments Expected from Ecuador's Latest Licensing Round
Ecuador’s 2018 Intracampos Licensing Round could become quite attractive to potential investors. That’s the hope of the country’s government who, through the Ministry of Energy and Non-Renewable Natural Resources, has made several adjustments to position Ecuador to benefit strategically during the current oil climate.
Intracampos consists of eight onshore E&P blocks in the Oriente basin. They offer conventional opportunities in low-risk exploratory areas located between established oil fields.
“We expect an investment of $1 billion in the Intracampos,” Carlos Perez, Ecuador’s Minister of Energy and Non-Renewable Natural Resources, said during a meeting Sept. 25 in Houston. The Intracampos Licensing Round began Sept. 12 and the Ministry is currently on a roadshow to help attract more investments.
For the Ministry, now’s the right time.
“The conditions are right – it’s the right time of year to include in next year’s budget; there’s been an upslope in oil prices; and as a government, we have matured and gained trust from the investment community,” Perez told a group of reporters during the meeting. “We’ve been able to make necessary adjustments to be competitive with our neighboring countries.”
Some of those adjustments include a change in tax regulations – recently, Ecuador cancelled its windfall tax – and a move from service contract offerings to new Petroleum Sharing Contracts.
While infrastructure has been an issue for some onshore basins like the Permian, the Ministry noted that there’s existing infrastructure near the Intracampos licensing blocks as well as a highly skilled workforce.
“Ecuador’s government has taken the responsibility of negotiating with the communities, making sure there’s no duplication of infrastructure or schools, for example,” Elena Nikolova, Wood Mackenzie’s research analyst for Latin America upstream oil and gas, told reporters.
She added that the close proximity to existing infrastructure would allow for new discoveries to be brought onstream quickly.
Offshore and Future Projects
Hopes are high for the Intracampos in terms of being an important business opportunity for Ecuador.
There’s already plans for Intracampos 2 Licensing Round, set to happen in 4Q of this year. And the Sur Oriente, which includes 14 blocks in Southern Ecuador along the Peruvian border, is expected to happen in late 4Q 2018/early 1Q 2019.
“A successful round would bode well for the Sur Oriente tender, tentatively scheduled for next year,” said Nikolova. “It will offer up highly prospective acreage located in the southeast of the country, adjacent to northern Peru where substantial volumes of oil have been produced since the 1970s.”
There’s also some offshore potential for gas fields, for which Perez said a lot of seismic work has already been completed.
“We see opportunities there and Ecuador has a deficit in natural gas,” he said.
The offshore gas fields are expected to be part of a round in 2Q 2019.
While Intracampos is expected to bring in $1 billion of investments, Perez said the Ministry expects to add another $3 billion in following rounds.
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