Ecuador to relaunch refinery tender in Nov: minister

Ecuador is ready to relaunch a tender next month to operate the Esmeraldas oil refinery once Ecuador's president Guillermo Lasso gives a green light, energy minister Juan Carlos Bermeo told Argus in an interview late yesterday.

"We could launch the refinery tender in November. Everything is ready, including the terms of reference and the model contract," explains Bermeo.

The 110,000 b/d Esmeraldas refinery is the largest of three run by state-owned PetroEcuador.

The refinery is currently operating at near full capacity and processed an average of 85,000 b/d in January to September 2021, 21.6pc more than the same period in 2020, according to PetroEcuador data.

Located in Esmeraldas province on the northern coast, the refinery has undergone several equipment overhauls over the last decade, but the works have left some defects and flaws tied to contracts dating back to the 2007-17 administration of Rafael Correa. The refinery yield is still weighed down by 30pc residual fuel oil.

In a policy carried over from former president Lenin Moreno, the Lasso administration is seeking a private-sector operator that would also install a small deep conversion unit to treat heavy crude and produce lower-sulfur products.

Bermeo denied that the administration's recent decision to freeze fuel prices would make the project less attractive to investors.

"The deep conversion refinery will cut that residual product to 5-8pc, plus high-quality Euro 5 specification fuel with 10ppm sulfur. But that private-sector responsibility ends at the refinery gate," he said.

"This is a private-sector delegation of refining, not related to sales. The private sector will deliver determined volumes of gasoline, diesel and fuel oil for sale," he said.

Looking ahead, the administration wants to liberalize the fuel market to sow competition, breaking with PetroEcuador's monopoly.

Ecuador has subsidized gasoline, diesel and LPG for decades, at great cost to the treasury. In May 2020, Moreno designed adjustments to gradually close the gap between subsidized pump prices and international prices by indexing them to WTI crude on the US Gulf Coast.

In the face of renewed protests, Lasso suspended the process on 22 October. The last increase in fuel prices — that accompanied the suspension of the adjustment program — triggered protests in Quito and along highways in at least six provinces on 26-27 October.

By Alberto Araujo