PetroEcuador announces fresh Oriente spot sale

State-owned PetroEcuador will receive offers on 12 July to sell 3.24mn bl of medium-sour Oriente crude, the company's chief executive Carlos Tejada told Argus.

The volume will be divided into nine shipments of 360,000 bl each for delivery starting on 28-30 August. Offers will be indexed to the benchmark WTI price.

Energy minister Carlos Perez told Argus that the spot sale is possible because Ecuador restructured in May a series of oil-backed loan agreements with Chinese state-owned PetroChina and Unipec and Thailand's state-controlled PTT trading, unlocking up to four 360,000 bl crude shipments per month for a total volume of 50mn bl.

With more crude unlocked from the oil-backed contracts, Ecuador plans to carry out more spot sales and to sign long-term agreements with a broader range of clients.

PetroEcuador's goal is to conduct at least one spot crude sale each quarter to establish a better price reference for Ecuadorean crude and to comply with a regulation that mandates that at least 10pc of Ecuador's exportable surplus of crude and fuel oil must be sold through the spot market.

According to Perez one of the companies interested in purchasing Ecuadorean crude is Spain's Repsol, which would process the 24°API Oriente in Peruvian refineries.

Quito is also seeking an agreement with state-owned Peruvian companies PetroPeru and PeruPetro not only to refine crude but also to jointly develop two exploration oil blocks located close to the Peruvian border. The blocks are controlled by Ecuador's state-owned downstream company PetroAmazonas, according to Perez.

Starting in 2010, Ecuador earmarked the bulk of its crude and fuel exports to fulfill the oil-backed loan contracts. In 2014, the country made a sole sale in the spot market after a three-year hiatus.

Since president Lenin Moreno took office in May 2017, PetroEcuador has made three spot market sales. The first took place in September 2017, when Glencore won a contract to purchase 2.16mn bl of Oriente with a $0.51/bl premium to the benchmark WTI price.

In January 2018, PetroEcuador awarded Repsol a contract to purchase 3.6mn bl of Oriente crude at $0.18/bl discount to WTI. In March, Tesoro Refining won a contract to purchase 3.24mn bl of Oriente at a $0.61/bl discount to the WTI price.