Ecuador: Ministry of Energy and Mines declares Force Majeure in hydrocarbon exploration and exploitation operations

This Ministry of Energy and Mines release was published using machine translation.

Today, the Ministry of Energy and Mines, through Resolution No. Ministry of Energy and Mines, declares Force Majeure in hydrocarbon exploitation and transportation operations.

Today, the Ministry of Energy and Mines, through Resolution No. MEM-VH-2023-0006-RM, declared the state of Force Majeure in hydrocarbon exploration, exploitation and transportation activities, due to the stoppage of the operations in the Trans-Ecuadorian Pipeline System (SOTE), Shushufindi Polyduct - Quito and Heavy Crude Oil Pipeline (OCP).

The suspension of activities in the main oil pipelines is due to the breakage of the bridge over the Maker River, Chaco sector, in the province of Napo, caused on February 22, as a result of the regressive natural erosion that occurs in the area.

The stoppage of the transport of crude oil was carried out in a preventive manner with the objective of avoiding environmental effects in the area, in the event of a possible collapse of the hydrocarbon infrastructure.

Immediately after the emergency was registered, an inter-institutional crisis committee was established, made up of personnel from the Ministry of Energy and Mines, EP Petroecuador, the Heavy Crude Pipeline Company and the Army Corps of Engineers, with the purpose of permanently evaluating the state of the sinkhole. and the erosive process of the Quijos River, to issue early warnings and enable short-term solutions that avoid environmental impacts and losses for the Ecuadorian State.

The Resolution also determines that EP Petroecuador and the Private Companies must report to the Ministry the technically viable activities to be carried out during the period of suspension of pumping from SOTE and OCP, as well as the maintenance work necessary to guarantee the operational continuity of the blocks and the acquisition of records of pressure restoration to the wells, which allow optimizing their production.

EP Petroecuador must also submit a report on the economic impact of the event on production, refining (effect on the operation of the Shushufindi CIS Refinery), oil marketing, if applicable.

It should be noted that the Estatal Petrolera mobilized a multidisciplinary team of 50 people to the site who, up to now, have carried out actions such as the placement of containment barriers, absorbent material, tanks, among others, in order to preserve the water sources in the event of a possible broken transmission lines.

The document contemplates that the Contractors for the Provision of Services for the Exploration and Exploitation of Crude Oil will be recognized for the duration of the suspension of operations due to the event of Force Majeure, as long as it causes the stoppage of more than 50 % of production activities; and, consequently, the termination date of the Effective Term of this Modifying Contract, will be postponed for a period equal to the duration of said stoppage.

The declaration of Force Majeure or Act of God is a contractual clause that applies to operations related to contracts in progress, exploratory activities and extraction of hydrocarbons, said clause avoids sanctions by international operators in the event of a possible breach of the established obligations. in contracts.

Link: https://bit.ly/3ZdgQ0Z