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Oil

Ecuador April crude oil production falls nearly 2.1% on year to 517,000 b/d; exports drop 17% to 9.617 million barrels

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Ecuador April crude oil production falls nearly 2.1% on year to 517,000 b/d; exports drop 17% to 9.617 million barrels

Bogota — Ecuador produced an average 517,000 b/d of crude in April, down nearly2.1% from the 528,000 b/d it pumped in the same month a year ago, but up1.2% from March, when it averaged 511,000 b/d, according to statistics thecentral bank posted on its website Friday.

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The year-on-year output decline reflects the country's ongoingcommitment, made in November 2016 to fellow OPEC members and other producers,to cut output 4%, which, in Ecuador's case, has equated to a targeted cut of26,000 b/d.

The central bank also announced that, during April, Ecuador exportedabout 9.617 million barrels of crude, a 17% drop from about 11.591 millionbarrels over the same month a year ago, and a 13.7% drop from the about 11.143million barrels shipped in March.

The average price of crude Ecuador sold overseas was $60.32/b in April,up 35% from the $44.69/b charged in the same month a year ago and up 5.8% fromthe $57.01/b average collected in March.

As a result, the average price of exported crude comfortably exceeds the$39.40/b price the country needs to break even on crude production, thegovernment has said. Prices are up year on year partly because of the OPECproduction cut which was made in a bid to limit global supplies.

Total export revenue from crude sales in April totaled $590.1 million, up13.9% from the $518.02 million collected during the same month a year ago, butdown 7.1% from the $635.27 million received in March.

The lion's share of Ecuador's crude exports go to China to pay downbillions of dollars of debt that it took out during the administration offormer president Rafael Correa to finance his social programs. Hydrocarbonsminister Carlos Perez said 97% of exports in 2018 will go to Asiandestinations, including Indian as well as Chinese creditors.

The government is expected to announce by the end of this month winningbids from eight companies willing to take over four mature oil fields andone gas field. State-owned Petroamazonas oil company has not identified thecompanies, but did say they are based in Russia, Mexico, Venezuela andEcuador.

The bidders are committed to investing a minimum of $750 million in theBlanca-Vinita, Cuyabeno-Sansahuari, Oso and Yuralpa oil fields located ineastern Sucumbios, Napo and Orellana provinces. The targeted boost inaggregate production at the four fields will be to 55,000 b/d from current36,538 b/d.

The offshore natural gas field Amistad, located in the Gulf of Guayaquil,is also among the fields up for auction, although the government has notdisclosed details of any bids, if there were any. Elevating Amistad'sproduction is perhaps the most urgent need as it has announced the declininggas reserves could force it import natural gas by the end of this year.

In a bid to cut overhead, the government announced in April its decisionto merge the two largest state-owned oil companies, Petroecuador andPetroamazonas, into one entity. Ecuador is suffering from a high debt load anda fiscal deficit that last year totaled $5.8 billion, or 5.9% of its estimatedgross national product.

The government has not announced how many of the two oil companies'combined 11,800 employees could be axed.

--Chris Kraul, newsdesk@spglobal.com

--Edited by Valarie Jackson, newsdesk@spglobal.com