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Peru and Ecuador sign crude oil pipeline pact

World Pipelines,

Ecuador has secured the rights to use a Peruvian pipeline to transport Amazon crude, the country’s Non-Renewable Natural Resources Ministry recently reported.

Ecuador’s Hydrocarbon Secretary, Andres Donoso, and the Head of state-owned Peruvian oil firm Petroperu, Pedro Mendez Milla, signed an agreement this week, allowing crude extracted from the southern part of Ecuador’s Amazon region to be transported to market via Norperuano pipeline.

The Norperuano pipeline stretches from Peru's northeastern Loreto region to the port of Bayovar on the Pacific coast.

At the signing ceremony, Ecuadorian Non-Renewable Natural Resources Minister Wilson Pastor, commented that it was "true energy integration, in which two countries, Ecuador and Peru, are joining forces and needs."

Pastor added that his country will pay an initial transportation fee of US$ 10/bbl of crude passing through the pipeline.

"We want to return to crude production both in the domestic area as well as to explore in foreign areas," Mendez said after the agreement signing. He added as well that the agreement will boost business in Peru and allow the country to make greater use of its infrastructure.

A confidentiality agreement was also signed by both parties, which will allow Petroperu to participate in bidding for drilling concessions. The 11th bidding round is scheduled for 24th October, after which Ecuadorian oil is to be extracted.

It is estimated that the production potential of the oilfields to be auctioned off in that round is 35 000 bpd. Pastor also added that exploration studies to be carried out after the auction would likely cause reserves in that region – currently estimated at 100 million bbls – to rise to between 800 million -1.5 billion bbls.

This means that production could amount to between 400 000 - 500 000 bpd in the future.

A US$ 300 million conduit extending approximately 100 km (62 miles) will be built to link the fields in Ecuador's southern Amazon region to the Norperuano pipeline in north Peru. Currently, the pipeline is at half capacity, transporting around 200 000 - 250 000 bpd.

Oil is Ecuador's main export product and also a key source of government revenue. Most of the country’s oil comes from the northern part of its Amazon region, where some 500 000 bpd are extracted and transported via the SOTE and OCP pipelines. 

Edited from various sources by Cecilia Rehn.

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