Ecuador at risk of falling to oil’s ‘minor leagues’

Ecuador faces the possibility of leaving the list of the world’s principal oil producers and falling to the minor leagues.

Rodolfo Guzmán, managing partner of consultancy Arthur D. Little's Latin America operation, made the comment at an energy seminar where he highlighted Ecuador’s 29th spot in a ranking of 30 crude producers.

Along with the need to have an attractive investment framework, competitive fiscal and royalty terms, good technical information, crude dispatch infrastructure and reducing permitting times, Guzmán pointed to two other “vital” issues.

According to the consultant, Ecuador has “serious problems” with corruption and security but said the new government is working hard on these two fronts.

He also called for greater private sector participation, which according to Guzmán would increase the industry’s efficiency and open the door to new investment, such as in enhanced recovery.

The sector expert pointed out that much of the spend has been carried out by national oil company Petroecuador and focused on the largest assets to slow the decline of mature areas.

The lack of exploration is another concern due to the need to replace reserves, with the ratio of proven reserves to production of around eight years, Guzmán added.

Read PCR envisions US$800mn investment for Ecuador upstream operations and Ecuador readying launch of upstream acreage round

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