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Different fates will have concessions for blocks 16 and 67 and that of the OCP, whose contracts expire in 2022 and 2023

Different fates will have concessions for blocks 16 and 67 and that of the OCP, whose contracts expire in 2022 and 2023

Different fates will have the concessions of blocks 67 and 16 and the Heavy Crude Oil Pipeline (OCP). In both cases, these are concessions that, upon expiration of the term, can legally return to the State. The first, the one that Repsol had for many years, and which recently passed into the hands of Petrolia, expires on December 31, while the OCP one ends on December 31, but in 2023.

According to the Minister of Energy, Fernando Santos Alvite: “On December 31 at midnight, blocks 16 and 67 return to the State.” He explains that Petroecuador will temporarily manage them and “it is expected to put them out to tender as soon as possible.” Santos says that Petrolia, which was currently managing those blocks, is invited to participate in the bidding.

A few days after the contract expires, the Petrolia company has threatened to initiate an arbitration claim against Ecuador, because according to its position, its rights to request an extension of the agreement have not been respected.

Meanwhile, in the case of the OCP, the contract ends on December 31, 2023, so there is a year to negotiate.

According to Minister Santos, these are two different cases. For example, regarding the soundness of the companies, Petrolia did not justify its experience or its financial or economic soundness and therefore did not obtain permission to buy Repsol. Instead, the OCP company is serious and has made a request that the contract be extended.

In this context, in the OCP it is necessary to make enormous investments in oil pipelines, since the erosion of the Coca River must be avoided. The OCP will celebrate 20 years of continuous operation in 2023 and major maintenance must be done. The rerouting may cost $200 million. “We are talking about a lot of money that the State does not have.” If an agreement is reached with the OCP in the sense that they finance and receive a reasonable fee for it, it can work, he explains. He also clarifies that this time it would only be an operation contract since the line becomes property of the State. The minister says that he is studying, for example, that the SOTE operation could be unified with the OCP, since now there is a duplication of efforts and personnel. “It could be optimized so that a single company manages the two pipelines.”

Meanwhile, the minister believes that a possible arbitration claim by Petrolia against Ecuador will not prosper. He thinks they can sue, but they have no basis for it. The minister explains: First, they never deserved the ministerial agreement that approved the purchase of Repsol because they did not demonstrate their experience or their technical or economic solvency. Second, it is not the obligation of the State to extend a contract. This is optional authority.

According to Santos, the law indicates that when an oil concession is sold, the buyer must have experience and solidity equivalent to that of the seller. “Repsol is one of the largest companies in the world, but Petrolia -with all due respect- is a paper company. We believe that any arbitral tribunal will rule in favor of Ecuador”, he comments. (YO)

Source: Eluniverso

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