Ecuador refinery repairs could take three years

State-owned PetroEcuador's 110,000 b/d Esmeraldas refinery will start a partial 15-day shutdown starting on 25 March for repairs to its hydrodesulfurization (HDS) unit, but fixing the overall complex will take at least three years, PetroEcuador chief executive Carlos Tejada told Argus.

Another 54-day partial shutdown to repair the refinery's FCC unit is scheduled to start by the end of May. The turnaround will require Ecuador to import 500,000 bl of clean products, according to Tejada.

PetroEcuador is seeking a window of price opportunity, between the end of spring and the start of the summer season in the US, to reduce the economic impact of importing a higher volume of products, mostly gasoline, to cover demand during the repairs, Tejada said.

The refinery went through a flawed $2.3bn overhaul in 2015 under the previous government of former president Rafael Correa, who ended a 10-year tenure in May 2017. The repairs are part of a wider effort to clean up Ecuador's oil industry in the wake of a series of corruption scandals left by the populist Correa administration.

"We were hit (by corruption) over 10 years. With just two stoppages, PetroEcuador will not be able to fully repair the refinery. This will require at least a three-year program," Tejada said.

Plans to deal with the corruption-tainted legacy of the previous administration include creating a special unit inside PetroEcuador to prevent fraud, with the support of Ecuador's anti-money laundering agency UAFE.

"With the help of UAFE, we are implementing preventive controls to make sure that what has happened here never happens again," Tejada said.

He acknowledged that the company's staff and management were angry after learning the extent of the damage left by corruption at the state-owned firm.

Wider preliminary plans also include restructuring Ecuador's oil sector. "We are conducting a comprehensive analysis. The general idea is to optimize the sector's performance, but there are no concrete actions yet, we are still waiting for a global diagnosis of the situation," deputy oil minister Patricio Larrea told Argus.

Among the preliminary options is a merger of PetroEcuador, currently dedicated to downstream business, with state-owned upstream firm PetroAmazonas.

As part of the efforts to restructure the oil sector and bring in more transparency, the oil ministry and PetroEcuador signed a cooperation agreement in December with the UN Development Program (UNDP) to evaluate PetroEcuador's five major oil projects that were left defective or unfinished by Correa's administration.

The projects include the Esmeraldas refinery upgrade, the 200 t/d Bajo Alto liquefaction plant, the 75,000 t Monteverde LPG terminal that is working at just 12.6pc capacity, the flawed 215Km Pascuales-Cuenca products pipeline working at 60pc of capacity, and earthmoving and construction of a water system at the site of the planned 300,000 b/d Pacific refinery.