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Ecuador LPG dock at risk of collapse: oil minister

16 Aug 2017, 3.23 pm GMT

Ecuador LPG dock at risk of collapse: oil minister

Quito, 16 August (Argus) — Faulty construction is threatening to collapse Ecuador's Monteverde LPG terminal dock, leaving the country vulnerable to a supply disruption, oil minister Carlos Perez said yesterday.

The $600mn facility was built without proper cathodic corrosion protection, he said yesterday during an inspection of the Esmeraldas refinery, in the latest extraordinary revelation of defective oil projects under the previous government.

The strategic LPG terminal is plagued with construction issues, among them its 1,500mt dock. Because of design flaws and omissions, "there are problems docking propane and butane vessels," according to Perez.

Monteverde was designed to accept tonnage of up to 75,000t. The installations include the 124km Monteverde-El Chorrillo LPG pipeline and four 4,000t LPG storage tanks in El Chorrillo outside Guayaquil.

Ecuador's state-owned PetroEcuador, which owns Monteverde, has been unable to secure an operating license for the terminal, located some 160km (99.4mi) west of Guayaquil and inaugurated in June 2014 by former president Rafael Correa.

In 2016 Ecuador imported 27,643 b/d of LPG or the equivalent of 81pc of its LPG consumption, mostly for residential use as a cooking fuel.

Before Monteverde was built, Ecuador had to lease storage tankers and barges to import and transport LPG to shore.

The LPG terminal woes have surfaced in the wake of official acknowledgment that the 110,000 b/d Esmeraldas refinery, which completed a $2.3bn overhaul in 2015, needs extensive repairs.

"Unfortunately, I must say that the Esmeraldas refinery is also in a critical state," Perez said. PetroEcuador will be forced to shut down the refinery for the repairs.

According to Perez, the costly revamp was limited to certain units, and less than two years after the upgrade, there have been several unplanned outages, 10 of which occurred in 2017.

Even the refinery's new fluidized catalytic cracker (FCC), which was replaced during the upgrade, is not working properly and overheating. The FFC repairs will take 45 days and cost $400mn, Perez said.

The power supply system is unreliable, Perez said, because only one of five power generators was replaced at the 37-year old plant. A second aging generator caught fire at the end of July and the refinery had to suspend operations for a week.

Several clean products storage tanks are also impaired. Some tanks are still under construction or undergoing repairs, so PetroEcuador had to ask privately owned heavy crude pipeline OCP to lend tanks to store products from Esmeraldas to avoid fuel shortages, according to Perez.

Other stalled refinery units include two sulfur plants and the catalytic reformer.

Perez said that the attorney general's office and the controller have been called to investigate the upgrade.

Faulty construction also was found at the new Pascuales-Cuenca products pipeline that transports gasoline, LPG and diesel from the Pascuales fuel terminal in coastal Guayas province to the Chaullabamba terminal in Cuenca.

The line is operating below capacity and is showing early signs of deterioration, Perez said. The line has two legs: the 102km Pascuales-La Troncal line with 46,500 b/d of transport capacity, and the 113km La Troncal-Cuenca line with 30,800 b/d of capacity.

But in January-May the line transported just 24,000 b/d, according to PetroEcuador data seen by Argus.

In 2013 PetroEcuador signed a $370mn contract with corruption-tainted Brazilian contractor Odebrecht to build the products pipeline that was scheduled to be completed by the end of 2015.

But the total cost of the pipeline, including associated infrastructure, climbed to $497.4mn, according to PetroEcuador documents.

The company's former chief executive Carlos Pareja Yannuzzelli, who was imprisoned on 11 August for corruption, has pointed to Jorge Glas, Ecuador's powerful vice president, as the mastermind behind a broad corruption scheme linked to large projects such as the refinery overhaul.

During Correa's 10-year presidency, Glas oversaw Ecuador's strategic sectors such as oil, power, telecommunications and mining. He has stayed on under current president Lenin Moreno, who won the April 2017 presidential election under Correa's populist Alianza Pais movement.

But since he took office in May, Moreno has distanced himself from Correa and Glas, stripping the latter of his powers on 3 August over bribery allegations linked to Odebrecht.

Glas has denied any wrongdoing and says he is the victim of political persecution.

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