State oil company Petroecuador has begun gradually shutting down wells in oil fields operated by the public company. The This measure was taken in accordance with decisions no. MEM-VH-2023-0006-RM and no. PETRO-PGG-2023-0007-RS dated February 23, 2023, declaring force majeure in the petroleum sector, due to the suspension of crude oil pumping through the Trans-Ecuadorian Oil Pipeline System (SOTE) and the Heavy Crude Oil Pipeline (OCP) – operated by OCP Ecuador SA – and fuels via the Shushufindi-Quito polyduct.

This was announced by the CEO of Petroecuador, María Elisa Soledispa, which also flew over the Marker River area, Napo province, where a bridge collapsed and exposed pipelines. The official checked the current situation and emergency and drainage works in SOTE, which are being carried out by the teams of the Public Oil Company and the Army Corps of Engineers.

Two oil pipelines and a polyduct stop pumping due to the collapse of the bridge on the Marker River

Soledispa reported that “necessary measures will be adopted to protect and guarantee the continuity of the company’s operations, optimization of available storage systems and timely supply of hydrocarbons to meet internal demand during periods of force majeure”, which will be maintained until the cessation of work continues in the oil pipelines and polyduct.

María Elisa Soledispa, manager of Petroecuador, together with Jorge Loor, manager of Poliduct, during a tour of the area affected by oil pipelines and polyducts. Courtesy: Petroecuador Photo: Space

Regarding exports, he pointed out that last Wednesday a shipment of Oriente crude was sent to the company Marathon Supply LLC, and other contractual obligations with international companies will be scheduled after the adoption of that declaration, according to what was communicated to the companies. .

Could pipeline paralysis lead to rising consumer prices or fuel shortages?

Closing the wells It was one of the foreseeable consequences of the crisis experienced by the paralysis of the three main pipelines for the transportation of crude oil and fuel in Ecuador. It is about the fact that due to the impossibility of pumping crude oil to Esmeraldas, the tanker in the Amazon is filling up and it is not possible to continue production. Technically shutting down wells is not a loss in itself, as they are then restarted, although several experts do not take this process lightly and believe it could create costs for the company.

The crisis creates other consequences for the state. According to Dario Davalos, expert on energy issues, the lack of exports could generate a a drop in revenue of $160 million in the seven days of the outage. However, he clarified that this does not mean a loss, because only the deliveries are moved and when contracts are fulfilled, payments are received.

Meanwhile, it’s today Energy Regulation and Control Agency found that the oil load at the Esmeraldas and La Libertad refineries fell. According to the report, the Esmeraldas Refinery currently has a load of 88.5%, while the day before it had a load of 93%. The reason stated in the report is precisely the lack of pumping from SOTE.

In addition, the Refinery in Freedom is at 36.8 percent. However, this low percentage has nothing to do with lack of pumping as the problem has been occurring since February 21st. In any case, a day earlier, from the 22nd to the 23rd, a load of 37.10% was reported. The report said that La Libertad was damaged due to bad weather conditions for the oil tanker to anchor. It is about the fact that crude oil from Esmeraldas arrives in La Libertad via cabotage.

According to Davalos, The decline of Esmeraldas was caused by the fact that although 1.8 million barrels would be stored in Balao, the company could reduce the refinery capacity by a small percentage in order to expand the stockpiles as much as possible. He explains that as a rule, the strategic volume of 800,000 barrels must remain intact. Thus, Petroecuador would have one million barrels left for processing in about nine days, given that the maximum capacity of the refinery is 110,000 barrels per day. If the charge drops a little, it can last more than ten days. That term would be enough to solve it in seven days, as Soledispa said.

In any case, Dávalos raises the alarm by stating that the La Libertad refinery is not currently producing base gasoline or fuel oil 4, as official reports show the Parsons unit at zero. He explains that this could force the company to import more expensive diesel.