“Sacha is the most important project in the portfolio and it would be with an integrated services contract with financing, with a term of 20 years”: Roberto Salas

Roberto Salas, Secretary of Public-Private Associations, presents an x-ray of the processes that have been carried out in the oil, hydroelectric, mining, and road sectors that involve private investment. On the horizon is, among the most ambitious projects, the Campo Sacha concession. Campo Amistad, although it is considered urgent, could be producing more local gas between the last months of 2023 and the beginning of 2024. Salas also explains that the megablock has been put under review, which would include blocks 43 and 31, and it is expected that the issue of block 16, which is currently operated by Petrolia, is resolved in the best way.

What are the advances that have been made in public-private partnerships?

I would like to mention what progress has been made, what is about to materialize and what is being structured. According to our monitoring of investments that have already closed the transaction and investments that have been made on the mining side, we have $2,000 million. Of the first $2,000 million mentioned above, $1,700 million in compliance with mining concession investments and energy projects such as El Aromo and Villonaco, for $300 million. In addition, we have bids and awards in a few months for $5.7 billion. There I am incorporating energy and hydrocarbon projects, including the Esmeraldas Refinery. We also have projects in structuring for around $19,000 million. There are other projects that will revise their fundamentals to be able to land them and that amount to $13,000 million, for example, the railway and the megablock 31-43, as well as the southeast round, which are under review.

Regarding mining, what are the new projects that you tell me have already been completed?

There are seven new projects that are industrialization. They are finishing the issue of advanced exploration and are already entering the construction stage. These are, among others, those declared strategic: Cascabel, Curipamba, Ruta de Cobre, Loma Larga, La Plata, Warintza. These add up to $11,000 million in his lifetime, but until 2025 investments of $7,000 million would be made.

In addition to the refinery, what projects are about to be awarded?

For example, the associated gas processes in the northeast, which must be worked on even by an opinion of the Constitutional Court; the other is the closed wells that already has offers submitted. The Esmeraldas and Energy Refinery, a non-conventional renewable energy block that has already submitted bids for 700 MW and you have to choose the best one. The other block that is in bidding is the combined cycle that is with a thermogas; this will surely close in the second semester of the following year. And the last one is the northeast transmission system. This is to bring energy from the hydroelectric system to the oil sector, to replace diesel.

There were claims on the subject of lighters or associated gas, because participating companies said that there were warranty requests outside of the regulations. What happened?

The bases must be met. At this point, the bases cannot be changed. There must be an analysis of compliance and if there are no signatures, it is declared void. On the other hand, if there were, you could move on to the next stage, the economic part.

With what gas are you going to tender the combined cycle block, national or imported?

In this tender, each bidder has complete freedom to supply himself in the best way: imported or locally produced. We all know that local production will be possible when Campo Amistad is in production as expected. It is expected to reach 100 million cubic feet per day, and then the local supply should come from there, otherwise the bidder has the freedom and cooperation of Petroecuador so that the gas can be imported.

Among the projects that are being structured is Campo Amistad?

Of course, Campo Amistad should be coming out next year, not only for bidding but for the award of the contract. This is one of the most urgent contracts, precisely because of what we are talking about right now, not only because of the generation but because of the need of the industry. This should be awarded in the third quarter of 2023 and the start of exploration and access to the reserves that may exist and the start of production at the end of 2023 or the beginning of 2024.

You tell me that there are $19,000 million in projects that are being structured… What others are in the pipeline?

In the structuring projects are the Intracampos 2 round and block 60, which is Sacha, which would be a project to increase production in a very important way. This could increase production to 50,000 barrels per day with an investment of $4.5 billion, which is done mainly in the first few years. This Sacha is the most important project in the portfolio and would be part of an integrated services contract with financing with a 20-year term.

But there it would continue with the same figure of other contracts with Schlumberger that have been criticized for the issue of the definition of rates, could it be detrimental?

What you have to do is do the job well and that there are no such problems or room for interpretations. Due to the restrictions that there are now worldwide for investments and financing of the oil sector, it is necessary to find the way in which investment is made. Do not forget that these projects cannot be carried out by participation, because they are in Petroecuador and the company is prohibited from doing so. The contract must be solid and strong and the determination of the rates is a key point that should be given to the one with the lowest rate.

But these contracts that are with financing led us to a deep indebtedness…

Indeed, there are possibilities of establishing an anticipated value and these anticipated values ​​generate much higher rates, since they have a financial cost. Service contracts could have this type of scheme, but they can’t necessarily be done that way. You can only pay for the service that is provided, as opposed to the amount of incremental oil. This way you don’t increase the cost of tariffs unnecessarily. In this, the ministry with Petroecuador will define what the scheme will be like if there is an advance or not, how the baselines are established. The best thing is that it is done in a transparent way.

Regarding energy projects, which is the first to go out to tender?

Definitely one of the most important projects of 2023 is the Cardenillo hydroelectric plant, the bases are ready, work is already underway on the final phase. Its tender would be launched in March 2023. This is a 1,300 million project that is quite well structured and has generated a lot of expectation. At the secretariat we have received many interested companies. These would be the main ones for 2023, which added to those of mining would give a total of contracts for $15,000 million. In any case, in 2023, between $2,500 and $3,000 million can be incorporated.

How are you seeing the issue of the megablock? Initially there was talk of blocks 43, 31 and 16 (this last one is now managed by Petrolia).

Block 16 is next to blocks 31 and 43 and is in a process in which the Ministry is defining how to continue. Blocks 31 and 43 are super important for the increase in production that is under review. And it is because with the agreements regarding the moratorium on new environmental licenses and the issue of prior consultation, and also the scheme of intangible zones, must be evaluated and we are doing that work. This one is not in the numbers because it is being reviewed, it should be resized to see what can actually be done. The ministry is the one that must make a decision and is in a process of defining transfer to the State, reversion to the State. Well, its concession time has already expired, but there is a process that is underway and that the ministry will resolve in the best way.

Now what about the train?

This topic has been in a process of considerable scrutiny. There was a first study by the IDB of a strategic vision to find an alternative without subsidies, but what is established is that having new routes for passenger transport, whether short or long distance, is not profitable. Very large investments would be required with an immense contribution from the State. What has been seen are the north and south corridors, whose pre-feasibility has been established. But there must be the interest of the mining companies to take this option so that they commit to the load. This is in a preliminary process. We are also seeing the rehabilitation of the tourist sections and we are trying to validate with potential tourist operation firms and in the coming weeks we will have news.

What plans do you have for road concessions?

In the case of road concessions, next year we are going to be structuring around ten roads, including the Manta-Quevedo, the southern viaduct of Guayaquil-fifth bridge, and we are beginning to manage certain studies for the Guayaquil-Quito and the Basin -Guayaquil. Together with the port of Esmeraldas, these are projects that we will structure throughout 2023 and by 2024 from the second quarter they will be closed in the new era of road concessions. (YO)