With the Esmeraldas refinery tender at hand, are more bidding processes on the way?

Ecuador has been one of the countries in Latin America hardest hit by the COVID-19 pandemic. The restrictions established to slow the advance of the virus have affected fuel consumption and halted the bidding processes planned for the oil sector.

The minister of energy and non-renewable natural resources, René Ortiz, talking with BNamericas, says that the oil sector has regained momentum and that, following a decree signed by President Lenín Moreno in July, the tender will soon be held to offer the concession to operate the state-owned Esmeraldas refinery, including the construction of a process to convert residues.

Esmeraldas, the country's most important refinery, has the capacity to process 110,000b/d and, as a ministry source told BNamericas in June, the concession to operate the refinery would be for a term of 20-25 years.

In the interview, the minister also mentioned the possibility of other tenders being launched.

BNamericas: How has the oil sector been affected by the pandemic?

Ortiz: The pandemic and the effect of confinement in the first stage and distancing in the second stage led to a contraction in consumption.

However, fuel and energy consumption will grow as the economy recovers, as is occurring throughout the world.

BNamericas: At what stage is the process to tender the Esmeraldas refinery?

Ortiz: The executive decree in July authorizing the concession to the private sector for administration and operation gives legal protection to the process. The legal structure is ready; the terms of reference are now prepared and we're close to starting the tender this month.

The process is so interesting that some companies have even asked about the La Libertad [processing capacity of 45,000b/d] and Shushufindi [20,000b/d] refineries.

BNamericas: So the government is also thinking of putting those smaller refineries out to tender?

Ortiz: As there are stakeholders who like the model, it would probably be done in accordance with the Esmeraldas model.

I have to consult on this with the president, to use the same model for the improvement of La Libertad and Shushufindi.

BNamericas: How much are these two refineries expected to require?

Ortiz: There is no estimate yet because each interested party must make their own proposal and has to visit the facilities first to check their status.

BNamericas: If the tender for Esmeraldas is called this month, could the tenders for the other two be called in the remainder of the year?

Ortiz: It's possible. We'll have to see, because at the moment the efforts are concentrated on Esmeraldas.

BNamericas: Are there any concrete signs of interest in Esmeraldas?

Ortiz: There are good companies with great reputations, international names, but I prefer not to mention any specifically.

BNamericas: And how is the Intracampos II upstream licensing round going? Will it be called or has it been abandoned?

Ortiz: There's also a face-to-face part that couldn't be carried out due to the COVID-19 pandemic, but I must say that the results of the previous [processes] aren't what was expected. Companies aren't meeting schedules or planned investments, there's no increase in production.

In order to manage Intracampos II, we first have to assess whether there is real interest from good companies that meet their commitments.