OREANDA-NEWS.  Ecuador's new oil minister starts work today amid sharp budget cuts and a decline in production stemming from last year?s collapse in oil prices.

Chemical engineer and downstream specialist Carlos Pareja Yanuzzelli, named on 13 November, replaced Pedro Merizalde, who held the position since April 2013.

"With the negative economic environment in the oil sector, more than an extraordinary technician such as Pedro Merizalde, we need now someone who knows more about finance and business and that person is Carlos Pareja," President Rafael Correa said on 14 November.

Pareja had been serving as chief executive of state-owned PetroEcuador since 21 July.

Prior to that appointment, he served as the company?s downstream manager and headed a major upgrade of the 110,000 b/d Esmeraldas refinery.

Under Pareja's tenure, PetroEcuador developed a plan to sell its retail fuel network, raise the super gasoline price, reduce staff and focus on core projects in a belt-tightening campaign.

The company has postponed new projects in favor of top priorities, such as completing the 215km (134mi) Pascuales-Cuenca products pipeline and the Esmeraldas upgrade.

At the end of September, PetroEcuador laid off 300 of its 5,100 workers, with further cuts to follow.

In the weeks ahead, the company is expected to sign a first-ever term contract for light crude for the upgraded refinery. Around 24 suppliers are in the running. PetroEcuador 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.

Maintaining oil production is a major challenge for Opec?s smallest member. Crude production sank by 1.87pc to 545,500 b/d in January-September this year compared to the same period of 2014, with a flat projection for next year.

Because of lower oil prices, state-owned upstream company PetroAmazonas' capital expenditure was cut to $2.2bn this year from $3.4bn in 2014. The company says it will continue to operate on an austere budget next year and is focusing on its most cost-efficient wells.

PetroEcuador and PetroAmazonas are likely to close the year with a combined $1.5bn debt with providers that will be paid only in 2016, the government says.

Quito is struggling to revive its flagship 200,000 b/d Pacific refinery project. The $10bn project is owned by RDP-CEM, a 51:49 joint venture between PetroEcuador and PdV.

After the government failed to reach an agreement with China's state-owned CNPC and China Development Bank, talks are underway with China?s state-owned Sinomach, South Korea's Hyundai and Bank of China to build and finance the $10.5bn refining complex.

The foundation for the Pacific refinery was laid in 2008 and the complex was originally scheduled to begin operations in 2013. The deadline was later extended to 2017.