Repsol to sell Ecuador blocks to New Stratus: Update

Market: Crude oil
18/11/21

Adds detail on 2022 Intracampos round.

Ecuador's government authorized Spain's Repsol to sell its 35pc operating stakes in two heavy oil blocks to Canadian independent New Stratus Energy.

The transaction highlights a trend of divestment by integrated oil companies, with some independent oil companies taking their place.

Blocks 16 and 67, located in Orellana province, currently produce a total of around 15,800 b/d of 15°API crude. Chinese state-owned firms Sinochem and Sinopec have a combined 34pc in the assets, and Taiwan's state-owned CPC holds the remaining 31pc.

Under the existing service contract terms, the government is supposed to pay a fee of $38/bl for production from block 16, and $29/bl for block 67. The two contracts expire in December 2022.

It is not clear how the government's outstanding debt on the contracts will be resolved in the transaction, whose value has not been disclosed. According to New Stratus Energy, the government's liabilities are around $120mn.

Speaking at an investment conference in Quito today, energy minister Juan Carlos Bermeo said he could not recall the amount of the debt, but said rising international crude prices are easing the load.

New Stratus chief executive José Francisco Arata -- a Venezuelan geologist who formerly headed Colombia-focused Pacific E&P now known as Frontera, told Argus in October that the company wants to change the existing contracts to production-sharing deals with an extension of at least 15 years, under a proposal to invest $200mn to drill 30 wells and reach up to 25,000 b/d of output in 2023.

Bermeo said the ministry had not received any request to extend the agreement. "We haven't received any formal request about the deadline extension. We only authorized the share sale overseas," said Bermeo, referring to the transaction that will take place in Spain.

Repsol has described the assets sale as "an important step in the announced process of asset portfolio rotation that will allow the company to concentrate on assets in fewer regions and maintain flexibility as the strategic business focus."

Courting investors

Today's event is aimed at promoting investment opportunities in Ecuador's oil, mining and electricity sectors.

The government plans to relaunch an auction for southeastern blocks next year to attract $6bn of exploration and infrastructure investment, and is preparing to issue a second Intracampos round in first half 2022, offering around six oil blocks in the northeast of Ecuador's Amazon region, Bermeo said.

The government is also studying the "option" of a concession for the 65,000 b/d Sacha oil field currently operated by state-owned PetroEcuador, he said.

He maintained that Ecuador will end 2021 with more than 500,000 b/d of crude production, rising further in 2022, even though the government's proposed national budget for next year is based on just 493,000 b/d.

"We have to be conservative in the budget figures, but we are pretty sure we'll accomplish our goals of increasing production," said Bermeo.

The minister told Argus in a recent interview that Ecuador will end 2021 with at least 515,000 b/d of output, ramping up to more than 580,000 b/d in 2022.

Ecuador is currently producing about 484,000 b/d of crude, according to regulatory data.

By Alberto Araujo

Related news posts

Argus illuminates the markets by putting a lens on the areas that matter most to you. The market news and commentary we publish reveals vital insights that enable you to make stronger, well-informed decisions. Explore a selection of news stories related to this one.

News

20/05/25

US gas market expected to tighten in 2026

New York, 20 May (Argus) — US natural gas producers and analysts are forecasting a tighter market in 2026 than previously expected because of rising LNG exports, a slowdown in crude production and a reluctance on the part of gas-focused producers to ramp up supply. The market has already tightened this year as cold winter weather balanced the previously oversupplied domestic market and Venture Global's Plaquemines LNG terminal ramped up faster than expected. Nymex gas delivery for 2026 at the US benchmark Henry Hub settled Tuesday at $4.30/mmBtu, up from $3.91/mmBtu at the start of the year. US LNG exports are expected to rise by 19pc to 14.2 Bcf/d this year, followed by a 15pc increase to 16.4 Bcf/d in 2026, the US Energy Information Administration forecasts. Meanwhile, tariff-induced economic uncertainty and plans by Opec+ to boost supply have lowered crude prices this year, which will probably throttle growth in the Permian basin, a prolific US oil field in west Texas and southeast New Mexico that accounted for 22pc of US gas supply in 2024. US onshore crude production has likely peaked as activity slows in response to the recent decline in oil prices, Diamondback Energy chief executive officer Travis Stice said earlier this month. US producer Antero Resources this week forecast a 5.5 Bcf/d supply growth shortfall from 2025-26 as producers fail to keep up with booming LNG exports, pipeline sales to Mexico and rising gas-fired power demand. Producers have so far been reluctant to ramp up activity in the Haynesville shale basin of east Texas and northwest Louisiana, the major marginal gas supplier to the US market and a key supplier to the coming wave of new US LNG export terminals, all of which are sited in Texas and Louisiana. Producers' hesitation might be linked to past experience, when they ramped up output for new LNG terminals only for those terminals' in-service dates to get pushed back, contributing to an oversupplied market that depressed prices. Haynesville operators' lack of response to higher gas prices in the first quarter of this year led analyst group Enverus to raise its 2026-30 US gas price forecast to $4/mmBtu. Some producers, including EQT, the second-largest US gas producer by volume, are holding off on locking in the elevated prices for 2026 production with financial derivatives, in part because they want exposure to the possibility of even higher prices. Those producers are "playing a little bit of a dangerous game", according to FactSet senior energy analyst Connor McLean. If a mild summer or delayed LNG terminal start-ups reverse expectations of a tighter market, producers might enter a weaker market in 2026 having "missed their chance" at more opportunistic hedges, McLean said. US LNG out the window Tudor Pickering Holt last week raised its "2026 base case forecast" for US gas prices from $4/mmBtu to $5/mmBtu. The Houston-based investment bank expects the US gas market to shift to a state of "material undersupply" in 2026, potentially pushing domestic prices so high that the price of producing LNG from US gas would exceed prevailing global LNG prices. Aside from short-term price spikes caused by storms or maintenance events, this would be the first instance of the US gas-to-global LNG price "arbitrage window" closing since pandemic-induced demand destruction caused more than 175 US LNG cargoes to be cancelled from April-November 2020, according to consultancy McKinsey. Energy Aspects head of North American gas David Seduski said he would not rule out the possibility of high US gas prices reducing exports, but that is not his "base case". According to Seduski, Europe is "in such desperate need of gas" that in the absence of some geopolitical development that boosts Russian gas sales to Europe, high US gas prices would probably just spur higher European gas prices and keep US sales to the continent profitable. Henry Hub prices would probably have to exceed $7/mmBtu given current global gas prices for US LNG cargoes to start being cancelled, FactSet's McLean said. By Julian Hast Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

Find out more

News

Shell CEO defends 'resilient investment strategy'

20/05/25

News

20/05/25

Shell CEO defends 'resilient investment strategy'

London, 20 May (Argus) — Shell chief executive Wael Sawan defended the company's "resilient investment strategy" at its annual shareholder meeting today, as directors faced a barrage of questions from climate-focused investors. A resolution calling for more details on Shell's LNG strategy gained over 20pc support, a level consistent with climate-related votes in previous years . But absent this year were the disruptive climate protests that have marked past meetings. This was partly due to Shell's choice of venue, London's Heathrow Airport, which has a five-year High Court injunction banning environmental protests on site. Still, climate-conscious shareholders dominated the discussion. One questioned how Shell could justify expanding oil and gas operations when the IEA's net zero emissions by 2050 scenario suggests no new oil and gas projects are needed. Shell's chairman Andrew Mackenzie responded that the IEA's scenario is just one of many and includes conditional commitments made by governments that may not materialise. "We see a phase of continuing growth, particularly in the use of gas and especially in LNG, that we think is appropriate to invest in," he said. Sawan pointed out that most of the net present value from Shell's oil and gas projects will be realised before 2040, "and so this is a very resilient investment strategy that we are offering our shareholders". He also highlighted that Shell has $20bn of capital invested in low-carbon alternatives such as biofuels, hydrogen and electric vehicle charging. "It is in our interest... to see that market grow," he said. A key focus was Resolution 22, filed by the Australasian Centre for Corporate Responsibility (ACCR), which called on Shell to explain how its LNG strategy aligns with its climate goals. "We believe that shareholders still don't have the information that they need to properly assess the risks associated with this strategy," said the ACCR's Sarah Brewin. The scale of Shell's uncontracted LNG out to 2050 exposes the company and its shareholders to "significant risk should prices fall and demand soften", she said. The company's LNG outlook "is highly optimistic and increasingly out of step with global trends", she added. Shell's board opposed the resolution, arguing that its strategy is based on a range of scenarios — including one exploring the impact of AI on energy demand. Its 2025 LNG Outlook, based on Wood Mackenzie data, forecasts a 60pc rise in global LNG demand by 2040, driven by economic growth in Asia and decarbonisation in heavy industry and transport. While the resolution did not pass, Shell said it will prepare a note within six months detailing its LNG market outlook, its LNG business strategy and how these align with its climate commitments. By Jon Mainwaring Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

News

Brazil to walk tightrope in Cop 30 fossil fuel talks

20/05/25

News

20/05/25

Brazil to walk tightrope in Cop 30 fossil fuel talks

Rio de Janeiro, 20 May (Argus) — Brazil is arguing that its developing country status allows it to consolidate its position as a major crude producer and is likely to lean on developed countries during much-awaited discussions on moving away from fossil fuels at the UN Cop 30 climate conference in November. Attempts to reach an ambitious outcome on mitigation — cutting greenhouse gas emissions — and actions to move away from fossil fuels were quashed at Cop 29 in Baku last year, and all eyes are on Brazil to bridge divides on this issue . Cop 30 president-designate Andre Correa do Lago has failed to address fossil fuels in his two letters outlining priorities for the summit, but members of the Cop 30 team have indicated the issue will be on the agenda. With geopolitical tensions and energy security questions redirecting government priorities away from the energy transition, the outlook is more challenging than when Cop parties agreed the global stocktake (GST) conclusion on fossil fuels and energy in 2023 . But Brazil is well-placed to take the lead. It is a respected player in climate discussions and has one of the cleanest energy mix — 49pc of its energy and 89pc of its electricity comes from renewables. Its own mitigation efforts prioritize slashing deforestation, which accounts for the lion's share of Brazil's greenhouse gas (GHG) emissions. Non-profit World Resources Institute Brazil describes the emissions reduction target in Brazil's nationally determined contribution (NDC) — climate plan — as "reasonable to insufficient" and notes that energy emissions are expected to increase by 20pc in the decade to 2034. Its NDC avoids any concrete steps towards winding down crude. After you The government's view on fossil fuels is that Brazil's developing country status, the oil and gas industry's importance in its economy and comparatively low fossil fuel emissions justify pushing ahead with oil production. Correa do Lago said earlier that Belem was picked as a venue for Cop 30 to show that Brazil is still a developing country, adding that any decision on oil and gas should be taken by Brazil's citizens. President Luiz Inacio Lula da Silva said that oil revenue will fund the energy transition. It is a position that has earned Brazil accusations of hypocrisy from environmentalists at home and abroad, but which also places it as a possible model for other hydrocarbon-producer developing countries. Brazil's diplomatic tradition of pragmatically balancing seemingly opposing positions could serve it well here, said Gabriel Brasil, a senior analyst focused on climate at Control Risks, a consultancy. He does not see Brazil's attempt to balance climate leadership with continued oil production as hurting its standing among fellow parties or energy investors. Civil society stakeholders hope pre-Cop meetings will help bring clarity on how Brazil might broach the fossil fuel debate. Indigenous groups, which are set to be given more space at Cop, are demanding an end to fossil fuel extraction in the environmentally sensitive Foz do Amazonas offshore basin. Meanwhile, Brazilian state-owned Petrobras moved one step closer to being authorized to begin offshore drilling there . During meetings of the UN climate body — the UNFCCC — in Panama City this week, the Cop 30 presidency will present ideas for the summit "with a focus on the full implementation of the GST". But it has to wait for countries to update their NDCs to gauge what is achievable on mitigation. Only 20 have submitted new NDCs so far, with the deadline pushed back to September. Brazil's own NDC gives some clues. It welcomes the launch "of international work for the definition of schedules for transitioning away from fossil fuels in energy systems" and reiterates that developed countries should take the lead. And a report commissioned by Brazil's oil chamber IBP and civil society organization ICS to be given to negotiators ranks Brazil as a "mover" in the transition away from oil and gas, ahead of "adapters" like India and Nigeria but behind "front-runners" Germany and the US. The research develops the idea of a country-based transition plan, using criteria such as energy security and institutional and social resilience, as well as oil and gas relevance. By Constance Malleret 2023 Brazil emissions sources Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

News

Libyan crude returns to Asia after one-month hiatus

20/05/25

News

20/05/25

Libyan crude returns to Asia after one-month hiatus

London, 20 May (Argus) — Libyan crude is once again heading to Asia-Pacific after exports to the region came to a complete halt in April — the first such pause since August 2020, according to Argus tracking data. The Suezmax Sea Sapphire departed Libya's Zueitina port on 15 May with around 1mn bl of light sweet crude bound for Thailand's Ko Sichang terminal, where it is expected to arrive on 26 June, according to Vortexa and Kpler. It marks the first Libyan crude cargo to load for Asia-Pacific since March, and flows to the region averaged 76,000 b/d in the first three months of this year. Despite favourable arbitrage conditions in April — the Brent-Dubai EFS more than halved on the month to 30¢/bl in March when April-loading cargoes were trading — no Libyan crude was loaded for the region last month. Buyers in Asia-Pacific appear to have opted for light sour Caspian CPC Blend instead. Shipments of the Caspian grade to Asia-Pacific hit a two-year high of 541,000 b/d in April, supported by weaker price differentials. But with eastbound arbitrage shipments now less workable, most May and June-loading CPC Blend supplies are heading to Europe, according to traders. This may have prompted Asia-Pacific refiners to turn back to Libyan grades. Thailand has been a regular buyer of Libyan crude, taking 16 cargoes in 2022 and nine in 2023, according to Argus tracking data. The Sea Sapphire is already the third Libyan cargo to load this year, matching the total for the whole of 2024. A second Suezmax cargo of Libyan crude is scheduled to depart Marsa al-Hariga on 27 May and arrive at China's Ningbo port on 24 June, although the fixture remains unconfirmed. Despite renewed interest from Asia-Pacific, Libya's overall crude exports are scheduled to fall by 9pc on the month in May to 1.13mn b/d across its 12 grades, according to provisional loading programmes. By Ellanee Kruck Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

News

US budget bill not enough of permitting fix: CEO

19/05/25

News

19/05/25

US budget bill not enough of permitting fix: CEO

Washington, 19 May (Argus) — Republican efforts to unilaterally overhaul federal pipeline permitting through a filibuster-proof budget bill will not provide the certainty needed to make major investments in new energy infrastructure, an industry executive said today. Republicans in the US House of Representatives will vote as early as this week on a bill that would offer fast-tracked approval of new pipelines and immunity from some lawsuits, in exchange for a fee of up to $10mn. But that bill, along with attempts by the White House to expedite project approvals by executive order, fall short of what industry officials would like to see on permitting, US midstream operator Howard Energy Partners chief executive Mike Howard said. "Permit reform through an executive order or a reconciliation bill, that doesn't give me the confidence to go spend billions of dollars on new infrastructure," Howard said at a conference held by the news publisher RealClear. "You have to have an act of Congress that both sides of the aisle agree to and make real laws." Energy industry officials have good reason to be skeptical that permitting provisions in the budget bill will remain intact over the years it can take to plan, permit and build large-scale energy infrastructure. Wind and solar developers, oil companies and others making investments based on the clean energy tax credits that Democrats passed through the Inflation Reduction Act now face a risk those credits will be gutted by the Republican budget bill . A bipartisan permitting deal would probably be far harder to negotiate if Republicans succeed in using the pending budget bill to dismantle the clean energy spending in the Inflation Reduction Act, given that any agreement would need to fast-track pipelines in exchange for faster approval of electric transmission lines needed for renewables. Pipeline officials say they are continuing to push for permitting legislation, along with other fixes to expedite projects. "We spend more money on our permitting process than we spend on the steel in modern pipeline projects today, so we are a lot more focused now on the regulatory process and really getting streamlined because we think there's a tremendous amount of value in getting that resolved," US gas infrastructure company Williams chief executive Alan Armstrong said today in an interview on CNBC. Last week, US gas producer EQT's chief executive Toby Rice said there needs to be "significant reform" on permitting to offer the industry the confidence needed to start investing again in new pipelines, after a series of major projects were blocked over the last five years. "We're going to have to have more conversations with the pipeline guys," Rice said at an event held by the US Energy Association. "We've had executives that have lost billions of dollars proposing pipelines and having them blocked, canceled or opposed." By Chris Knight Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

Business intelligence reports

Get concise, trustworthy and unbiased analysis of the latest trends and developments in oil and energy markets. These reports are specially created for decision makers who don’t have time to track markets day-by-day, minute-by-minute.

Learn more