PetroAmazonas in ITT talks with services firms

Ecuador's state-owned PetroAmazonas is in talks with oil services companies to develop the controversial Ishpingo-Tambococha-Tiputini (ITT) heavy crude block, industry executives told Argus .

In anticipation of starting to drill at Tiputini by June 2015, PetroAmazonas is looking for a contractor to offer credit or work under a deferred payment scheme.

Production at Tiputini is expected to begin by April 2016 at an initial rate of 8,000 b/d and will require three platforms and 90 wells.

Tiputini and Tambococha hold nearly 50pc of ITT's 850mn bl recoverable reserves.

The ITT complex, which partially overlaps the environmentally sensitive Yasuni national park in the Amazon rainforest, has the potential to produce at least 100,000-200,000 b/d of 14˚-15.5˚ API crude over 22 years with an investment of $5.5bn, PetroAmazonas says.

Oil services companies already working in Ecuador include US firms Schlumberger and Halliburton, China's state-owned Sinopec Services, Ecuador's Sertecpet and Colombia's Montecz and Edinpetrol.

"Services companies have state of the art technology, minimally invasive to work in environmentally delicate areas. It will cost more, but PetroAmazonas will get the best results," one of the executives said.

Petroamazonas has not commented on the possibility of working with services companies to tap ITT.

But the firm is already working closely with such firms in consortiums with traditional oil companies at its main mature fields, including Shushufindi-Aguarico and Libertador-Atacapi.

In 2012, the Shushufindi consortium, made up of Schlumberger and Tecpetrol, signed a 15-year enhanced recovery contract for Shushufindi-Aguarico, where production has since jumped from 45,153 b/d to 70,000 b/d.

The Pardaliservices consortium, comprised of Argentina´s Tecpetrol, Schlumberger, Canada´s Canacol and Sertecpet, signed a separate 15-year contract to stem the decline at Libertador-Atacapi and slightly increase production from 16,200 b/d in 2012 to at least 16,395 b/d by 2015.

And on 8 October PetroAmazonas signed six 15-year service contracts with nine companies to perform enhanced recovery at 17 of its 65 oil fields. The contractors include Schlumberger, Halliburton and Sinopec Services.

"PetroAmazonas will be the visible head of the ITT project, as it is determined to start the block's development even if agreement with an international partner does not materialize," the executive said.

The talks with services companies appear to be running in parallel to an effort to bring in a deep-pocketed Chinese partner. In April 2014, PetroAmazonas hired local law firm Almeida Guzman &amp; Asociados to obtain legal support for negotiations with China's state-owned CNPC, under the codename "upstream CNPC project," according to official documents seen by Argus .

Ecuadorean government officials are currently in China negotiating possible upstream and downstream investment.

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