Petroecuador to Sign 2 Additional OCP Agreements

Ecuador's state oil company Petroecuador aims to sign agreements with Spain's Repsol YPF and Brazil's Petrobras during the week March 22-26 to use 100,000 barrels a day (b/d) of their excess capacity on the OCP pipeline, a Petroecuador spokesperson told BNamericas.

Repsol YPF and Petrobras have take-or-pay agreements for 150,000b/d and 100,000b/d capacity respectively on the OCP, but their respective transport volumes are only 80,000b/d and 70,000b/d at present, the spokesperson said. That frees up 100,000b/d that Petroecuador could use while its Sote pipeline is being repaired after it was ruptured by a landslide on March 11.

The agreements would be in addition to the main agreement signed by Petroecuador on Thursday (Mar.18) with the OCP consortium to transport up to about 230,000b/d of crude on the OCP.

The main advantage of signing agreements with Repsol YPF and Petrobras is that the price would be lower than the US$2/b that OCP is charging Petroecuador, the spokesperson said. The actual price the companies will charge is currently under negotiation.

Petroecuador will have to swallow a significant increase in transport costs this month because it usually only pays US$0.60 a barrel on the Sote.

The OCP's capacity is 450,000b/d and private companies are currently only transporting about 150,000b/d, the spokesperson said. Petroecuador wants to use all of the remaining OCP capacity to ship its own production and 70,000b/d of the state's share of production from privately operated fields.

Petroecuador transported 30,000-50,000b on the OCP during the first night of operations, an amount expected to increase to 230,000b/d in the coming days as Petroecuador empties its storage tanks, and then fall to an average of 130,000b/d during the next month while the Sote is repaired, the spokesperson said.

The company aims to transport a minimum of 1.1 million barrels (mb) of oil and up to 5.4mb on the OCP during repairs on the Sote to supply its La Libertad and Esmeraldas refineries and meet its international export commitments.

The agreement could not have come sooner for Petroecuador, which had to cut oil production 29% to 135,268b on Thursday due to lack of storage space on its Amazon fields in the east of the country, Reuters quoted a production report as saying.

The company was producing about 198,000b/d before the accident on the Sote.

Petroecuador declared force majeure on its crude exports after the landslide in order to guarantee domestic fuel supply, but with the OCP agreement the company will resume exports on March 24 with a first shipment of 720,000b from OCP's Balao terminal. Further shipments for the same amount are scheduled for March 29 and 31.

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