PetroEcuador to meet crude suppliers in Houston

OREANDA-NEWS. October 06, 2015. Senior executives from state-owned PetroEcuador will meet in Houston next week with 24 firms interested in supplying crude for the newly upgraded 110,000 b/d Esmeraldas refinery.

The firm is seeking to purchase 30mn bl of 28°API crude with 0.07pc sulfur for one year. Proposals must include financing alternatives covering 100pc of the purchase cost, highlighting the wider economic struggles facing Quito in the wake of last year?s oil price collapse.

The planned crude imports represent a controversial departure from the company?s traditional crude-exporting role, but the move is part of a regional trend. Fellow Latin American oil producers Venezuela and Argentina have also imported light and medium quality crude over the past year, and Mexico is looking to swap some of its heavy crude for US light crude.

PetroEcuador aims to secure the supply before the refinery resumes normal operations around the end of November, after a comprehensive 16-month upgrade that started in July 2014.

Terms will be reviewed by PetroEcuador's board of directors, then by the government, before PetroEcuador calls a formal tender to award the supply contract, a company official told Argus.

The revamped Esmeraldas refinery will be able to process crude of at least 24°API which the country produces, but using a higher quality crude will allow the facility to produce 2pc more clean products, the official said.

Although Ecuador produces 28°API crude at its oldest oil fields, mainly 80,000 b/d Shushufindi and 72,000 b/d Auca, located in the northern Amazon oil district, it is mixed into heavier grades with a higher sulfur content, also produced in the Amazon, before the crude is shipped through the 360,000 b/d SOTE pipeline.

The resulting blend that finally reaches the Esmeraldas refinery is 24°API and 5-6pc sulfur.

PetroEcuador chief executive Carlos Pareja Yannuzzelli said the plan is an initiative of the company, not the government, and aims to tap into a commercial opportunity at a time when oil prices have declined.

Ecuador currently produces around 540,000 b/d of crude.