Ecuador fuel terminal jeopardized by court ruling

A major terminal that Ecuador uses to import refined oil products is at risk of closure because of a legal dispute.

A 28 May judicial order stemming from a dispute between state-owned PetroEcuador and the Guayaquil municipality could suspend operations at Tres Bocas, one of Ecuador's three major clean products import terminals.

Guayaquil opposes the docking of Handymax vessels at the 36-year-old terminal.

PetroEcuador has upgraded its infrastructure at Tres Bocas, located close to Guayaquil, in order to bring in three 40,000t Handymax vessels per week to unload diesel, gasoline, jet fuel and fuel oil directly on to the dock, the company's chief executive Carlos Tejada told Argus.

Currently clean products tankers, coming mainly from the US Gulf Coast, dock at La Libertad port or Puna Island in the Pacific Ocean, where the products are transferred to a fleet of 12 privately owned 15,000t barges and then shipped to Tres Bocas in an up to 10-hour trip, Tejada says.

The barges' owners charge $30mn/yr to PetroEcuador to transport fuels from La Libertad and Puna to Tres Bocas.

On 16 May the company was granted an environmental permit allowing it to dock Handymax vessels starting in July-August, but on 28 May a judge revoked the permit.

Guayaquil mayor Jaime Nebot says that allowing large vessels to enter Tres Bocas would increase the risk of oil spills, but a PetroEcuador study claims that the risk is 3.9 times higher under the barge system.

Ecuador's new environmental code approved in April prohibits the operation of such infrastructure without an environmental permit. As a result, PetroEcuador is now running the Tres Bocas terminal illegally. "If we obey the judge's ruling the company will no longer be able to supply 65pc of Ecuador's gasoline and diesel demand," Tejada says.

Tres Bocas is a key link in the supply chain of imported diesel, gasoline and LPG to several cities, including Guayaquil, Ecuador's largest city, Cuenca, Ambato and Loja.

"We are operating on a knife´s edge. PetroEcuador can be sanctioned and I may go to prison, but I cannot afford for half of the country to run out of fuel. Besides Ecuador's constitution prohibits paralyzing any public services," Tejada says.

But the greater risk, he says, is that Guayaquil persists in a judicial battle that could block the docking of Handymax vessels at Tres Bocas for years.