Ecuador’s crude production to drop 2pc in 2017
In 2016 production grew 1pc to 548,400 b/d from the previous year, according to central bank and oil regulator Arch figures, but it is expected to drop this year as a result of Ecuador's participation in an Opec accord to support prices by cutting production.
Ecuador agreed to limit production to 522,000 b/d in the first half of this year, starting this month. Quito hopes to offset output losses by selling its Oriente and Napo grades at an average of \\$42/bl in 2017, some 18pc above the 2016 average export price, according to the central bank.
Production from foreign oil operators outpaced growth by state-owned PetroAmazonas last year. The company produced 432,800 b/d, up by 2.3pc from the previous year, but output from China's Andes Petroleum, Spain's Repsol and Italy's Agip, among other foreign firms, dropped by 4pc to 115,600 b/d.
Crude exports are also expected to shrink to just over 367,000 b/d in 2017, under the finance ministry projections. In January-November 2016, crude exports averaged 396,060 b/d, according to central bank statistics.
Ecuador plans to comply with its Opec quota mainly by reducing enhanced recovery at some of PetroAmazonas' oldest mature fields, "allowing production to decline naturally," foreign minister Guillaume Long said, without specifying the fields.
Quito will try to insulate its Ishpingo-Tambococha-Tiputini (ITT) heavy crude complex from the production cut. ITT, which PetroAmazonas started developing in September 2016, holds an estimated 1.67bn bl of 14?-15.5?API reserves.
Output at Tiputini, the first of the three ITT fields to be tapped, started at 23,000 b/d in September and closed December at 30,000 b/d. The field was originally scheduled to reach 40,000 b/d by the end of 2016.
If needed to comply with its Opec pledge, Ecuador could delay the start of production at Tambococha, which is currently scheduled for launch by June 2017, a governmental official told Argus in a previous interview.
The reduction in output by foreign oil companies also helps Ecuador to achieve its Opec goal, according to the same official. The firms' production has been shrinking since early 2011, after Quito reformed its hydrocarbons law and forced the operators to switch from their production-sharing agreements to fee-based contracts.