Ecuador Oil Block Sale Draws Little Foreign Interest

Source: Reuters 11/29/2013, Location: South America

Ecuador mustered bids for just four of 16 oil blocks it offered in its Amazon jungle region which could potentially contain a total of 1.5 billion barrels of crude.

A subsidiary of Spain's Repsol YPF - Repsol Cuba - and China's Andes Petroleum made offers for three blocks, the awarding of which will take Ecuadorean authorities five months to finalize, Minister for Non-Renewable Natural Resources Pedro Merizalde said late on Thursday.

Ecuadorean state oil producer Petroamazonas, in partnership with Chile's Enap and Belarus's Belorusneft, will begin the development of a fourth block.

"In order to incorporate new reserves that will make it possible to raise the country's production levels, the Ecuadorean state will guarantee the use of new technologies, operated by companies committed to national development," Merizalde told reporters.

The international auctioning of the blocks had been announced last year but was twice delayed at the request of the companies interested in the oil reserves.

The blocks are in the Amazon provinces of Pastaza and Morona Santiago, near the border with Peru and on the edge of Yasuni park, one of the world's most important ecological reserves.

In this zone, the Andean nation also hopes to explore the Ishpingo-Tambococha-Tiputini (ITT) block, with an estimated 920 million barrels of crude reserves.

Merizalde said that the reserves offered in the first three blocks were around 380 million barrels but potentially contain up to 1.5 billion barrels.

The companies in the bidding for the blocks signed a service delivery contract under a fixed tariff system negotiated with each company.

The government will call for a new auction next year for the blocks which did not receive any offers, once seismic studies have been completed.

The exploration work will last up to six years and there will be a 20-year concession for the pumping of oil, according to data from the Hydrocarbons Secretariat.

The auction has drawn heavy criticism from indigenous communities that live immediately around the fields and have threatened to turn to international organizations to prevent them from being drilled.


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