Petroecuador to Increase Spot Market Oil Sales by 26 Million Barrels in 2024

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Written by Amir Richani for Industrial Info Resources (Sugar Land, Texas)--In 2024, Petroecuador will have an additional 2.16 million barrels of crude oil available for sale on the spot market each month, or 26 million barrels a year, following the expiration of two long-term contracts this month. The Ecuadorian energy company will free about 60% of its exportable output for spot market sales, while the remaining will be destined for long-term contracts.

The two contracts expiring this month are with Shell Western Supply and Trading, signed in 2019, and PTT International Trading PTE, signed in 2016.

Throughout December, Petroecuador has been producing 400,000 barrels of oil per day (BBL/d), representing about 80% of the nation's oil output.

"The sale of these hydrocarbons will allow ... Petroecuador to obtain better differentials, in accordance with the conditions of the international market and not tied to the formula agreed upon in the previous contract, which will generate economic benefits for the country, for around US$7.2 million per month and US$86.4 million per year," the company said in a statement.

Despite the availability of more oil sales in the spot market, Petroecuador will face a challenging 2024 as it prepares to shut down the Ishpingo-Tambococha-Tiputini block, better known as the ITT.

Located in the Amazon rainforest, the ITT is one of the largest oil assets in the country, with a production close to 60,000 BBL/d. However, its location has raised environmental concerns for years, as groups have criticized the long-term impact of ITT's hydrocarbon operations in the Yasuni natural reserve.

In August, Ecuadorians voted to end production at the ITT block to protect the environment, pushing Petroecuador to prepare a closure and evacuation plan.

According to Reinaldo Armijos, former general manager at Petroecuador, the company plans to shut down the ITT block by August 31, 2024. However, before its closure, the asset is expected to maintain production near the 40,000-BBL/d mark.

Also, drilling in the ITT block will halt this month to start the shutdown process, according to Armijos.

Eduardo Miranda replaced Armijos in December with the establishment of Daniel Noboa's new government.

According to a presentation by Petroecuador in June, the energy company and Ecuador could lose more than US$16 billion in the next 20 years from the closure of the ITT.

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