New Ecuador president taps ex-Petroamazonas chief Bermeo Calderon as energy minister

Bogota, Colombia — Ecuador's newly inaugurated president, Guillermo Lasso, has named oil engineer Juan Carlos Bermeo as the country's new energy minister, replacing the previously named Roberto Salas who last week turned down the appointment after disclosing possible conflicts of interest.

In a ministry statement, Bermeo, whose official title is "minister of energy and non-renewable natural resources," said he would implement Lasso's "priorities" of attracting more foreign investment to Ecuador's oil patch and refining and duplicating Ecuador's crude output over the president's four year term. Currently, produces just over 500,000 b/d of crude.

Formerly head of Petroamazonas, which is one of Ecuador's two main state-owned oil companies, and energy vice-minister under previous president Lenin Moreno, Bermeo has 40 years of experience in the nation's oil patch. He also served previously as manager of the Heavy Crude Pipeline (OCP), the nation's largest with a capacity of 450,000 b/d.

Lasso's first choice for energy minister, Salas bowed out last week citing "personal reasons." Potential conflicts of interest associated with his positions as director of the Canadian miner Adventus and CEO of another mining company named Nobis had sparked some controversy that Salas admitted might take too long to iron out.

The new minister faces several thorny energy-related issues. Top among them may be Lasso's promise made shortly before his May 24 inauguration to double the Ecuador's oil output during his term. It comes amid opposition to drilling in the ecologically sensitive Amazon basin and a lack of investment dollars made more acute by the country's dire fiscal condition.

The bulk of an output increase would have to come from the country's so-called ITT block in the Amazon Basin, an oil rich but environmentally diverse area where environmentalists and indigenous rights groups have opposed oil exploration and production. Responding to that opposition, previous president Moreno signed orders during his term to reduce the area of ITT open to oil drilling.

Bermeo also must manage the repositioning of the country's two main oil pipelines threatened by ongoing erosion of the Coca River in the eastern Andes foothills. Flooding and landslides caused partially by the river's changing course destroyed sections of the OCP and the SOTE (360,000 b/d capacity) in April 2020, temporarily halting the flow of oil to two main refineries and to the Balao export depot on the Pacific Coast.

The break also spilled oil into the Coca River, the main drinking water source of the city of Coca (pop. 45,000), where residents still suffer the impacts. Petroecuador, the state-owned oil company, has built several pipeline bypasses as erosion continues. Meanwhile, the company awaits a comprehensive pipeline rerouting plan aided in part by consultations with the US Army Corps of Engineers.

Refineries need upgrades

Bermeo also will lead the search for new owner-operators of Ecuador's two main refineries, Esmeraldas (110,000 b/d) and La Libertad (45,000 b/d) , which are in need of $2 billion in upgrades and modernizations. Long a state-controlled industry, refining in Ecuador will be turned over to any private firm willing to make the needed investments, officials have said.

Cash-poor Ecuador is in a financial bind caused in part by billions in oil–secured loans from China and Thailand taken out during President Rafael Correa's term (2007-2017) to finance an ambitious social and infrastructure agenda. Lower oil prices has meant Ecuador now ships more oil than anticipated to stay current on the loans, leaving less to finance the current budget.

Ecuador is also in the politically sensitive process of eliminating $1 billion in government subsidies of gasoline, diesel and liquid propane gas as a condition of bail-out loans from the International Monetary Fund. A previous government move in October 2019 to eliminate the subsidies all at once sparked 10 days of violent protests that negatively impacted crude output and refining.