Fuel imports reached $7,646 million, an increase of 70% due to prices and higher consumption of diesel

In 2022 the cost of importing fuels reached the astronomical figure of $7,646.6 million, which meant a growth of almost 70% compared to imported in 2021 ($4,522.5 million). When looking at the latest statistical report from Petroecuador, however, it can be seen that this price increase is not consistent with the purchase in volumes, which only grew by 6.82%. It is that in 2021 56’905,117 barrels of fuel were imported and in 2022 there were 60’787,156 barrels.

One of the fuels that had the greatest impact on this import was diesel, both due to the increase in prices, due to the global problems of the war in Ukraine and Russia, as well as the increase in domestic consumption, especially because of the dry season, experts explain.

The payment in dollars for premium diesel grew 115%, going from $1,429.7 million in 2021 to $3,083.1 million. The price per barrel rose astronomically in one year. While in 2021 they were paid $85.86, in 2022 it ended up canceling $153.23 per barrel. Diesel 2 also had a significant increase. The importation of this fuel cost $1,250.1 million while in 2021 $617 million were paid, that is, there was an increase of 102.6%. In volume, 7,151,074 barrels were imported and in 2022 there were 8,275,681 barrels, an increase of 15.73%.

Oswaldo Erazo, executive secretary of the Chamber of Distributors of Petroleum Derivatives (Camddepe), recalls that Ecuador has a deficit in the production of derivatives. For this reason, it must import 65% of the diesel consumed, 63% gasoline and 84% liquefied petroleum gas. This is bad business for the State, since we import at international prices and sell at a subsidized price within the country. This situation has become more complex in the last year, due to the increase in international fuel prices.

This year, he says, the drought issue has left its mark due to increased fuel consumption. According to data from Petroecuador, the increase in cInternal fuel consumption for the electricity sector in the country reached 84% more: while in 2021 consumption was 2,815,016 barrels of fuel (diesel 2, premium diesel fuel oil # 4 and remainder), in 2022 there were 5’184,020.

For Erazo, in the electricity sector there is a double subsidy. First, the fuel is sold to the thermoelectric plants for subsidized generation, while when the thermoelectric plants sell their energy to the public, the rates are also subsidized.

For his part, Jorge Luis Hidalgo, energy expert and manager of the Green Power gas company, He considers that at the moment the country suffers from the seven plagues on the energy issue, especially fuel.

The subsidies are very high because the sale prices were frozen on June 30, 2022 at the request of the Confederation of Indigenous Nationalities of Ecuador (Conaie). Low prices in the domestic market do not mandate energy efficiency or promote national energy security.

Explain what the war in Ukraine generated an increase in fuel prices to a greater degree than that of oil and to this is added that due to the powerful drought the consumption of diesel has skyrocketed.

He agrees that diesel is key to moving heavy machinery, transporting passengers and loading products. Due to the subsidies, there are not many people in Ecuador who knew or felt that there was a shortage or that a gallon of diesel cost $5.

What has happened to diesel, says Hidalgo, has led the Vice Ministry of Electricity and Celec to issue official letters asking that the bidding processes for Campo Amistad be accelerated because thermoelectric plants increased their consumption during the dry season. This can be seen in November, when it reaches a peak increase in diesel consumption of 30%. Even the authorities saw the need to force the Machala thermogas with adaptations so that it consumes diesel in equipment designed for gas. “We were about to go back to the blackouts, but what will happen in the next dry season?” he wonders.

Regrets that from what has been seen Petroecuador is in no hurry to put out to tender Campo Amistad, nor to connect the oil fields to a substation that has been ready to operate since 2017, and prefers to generate with imported diesel. In addition, he considers that it matters little to the energy authorities that the new 400 MW thermogas tender is carried out with imported natural gas at 40% more than the national price.

For him, Ecuador lives a permanent blindness due to subsidies. For example, the low inflation that we have is, to a large extent, because the State allocates enormous amounts of resources to pay for fuel subsidies. “Who is the State? Well, all of us, ”she says.

Meanwhile, according to Darío Dávalos, also an energy analyst, Ecuador needs more strategic thinking, like that of other countries in the face of the conflict in Ukraine. He assures that Russia has sold diesel cheap. He comments that France, with a position for a peaceful solution to the conflict with Ukraine, has had the possibility of buying diesel of Russian origin and at a cheaper price. He also says that there are international news that the United States buys diesel from India, and this fuel is produced with Russian oil.

Regarding the issue of dry season, he observes that problems have been detected in the maintenance of the electrical park, pending -according to the authorities- for three and four years. In any case, he comments that the current energy authorities are not new to the ministry, but they want to pass off being surprised by these events. (YO)