Ecuador to Sign 30-Year Contract with Ivanhoe for Pungarayacu Field

Dow Jones Newswires

QUITO (Dow Jones Newswires), October 8, 2008

Ecuador state oil company Petroecuador and Ivanhoe Energy Ecuador, the local unit of Canada's Ivanhoe Energy Inc., on Wednesday will sign a 30-year service contract to develop the Pungarayacu oil field, a Petroecuador official told Dow Jones Newswires.

Camilo Delgado, a vice president of Petroecuador's Petroproduccion unit, said Ivanhoe company will make all the investments the field needs.

"The investment for the period is estimated at around $13 billion," Delgado said.

Pungarayacu is located in the Amazonas region.

In the first stage of around a year, the company will invest $100 million for evaluating the field. In the second stage, the company will invest around $500 million.

According to project plans, the oil production will begin with 30,000 barrels per day and could rise to 120,000 barrels per day.

The Pungarayacu's crude oil has between 8 and 9 degrees gravity on the API scale. Ivanhoe has special technology called HTL-Heavy to Light to transform the heavy crude into somewhat lighter grades of around 23 degrees gravity API.

According Delgado, Petroecuador will pay Ivanhoe around $37 per barrel when production begins. He added that the price will be adjusted each quarter according factors included in the contract.

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