Campo Amistad already has a feasibility report and a new expression of interest, but is still in limbo

He Petroecuador’s contract committee recognized the viability of Campo Amistad, is located 55 kilometers from the coast of Ecuador, with a view of this change from the current production of 25 million cubic feet per day to at least 100 million cubic feet per day. This would require an investment of $297 million, which would come from a private company. Additionally, a new sign of interest in the exploitation of this gas arrived on March 6, 2023, this time from the president of the Dominican Republic, Luis Abinader, who met with President Guillermo Lasso in Carondelet.

Despite this, Campo Amistad still seems to be in a kind of limbo. It is about the fact that the procedures for specifying the entry of a private or state investor (if we now take into account the interests of the Dominican Republic) into this gas field have not yet ended, while the gas importer sectors offer the country this fuel abroad, and amid possible environmental restrictions, related with the Santa Clara Island Marine Reserve.

It’s January 12th Petroecuador’s contract committee met and gave a favorable report for the participation of a private company under the figure of contracting specific services with financing in order to be able to carry out activities of research and integral development of block 6. This with the aim of optimizing and increasing the natural gas production of Campo Amistad. This requires an investment of 297 million dollars. According to the report, the project is technically viable in terms of Jack UP drilling. However, almost two months later, the company’s Board of Directors has not yet been convened give the green light to the process.

The project, according to the Commission’s statement, aims to increase production, evaluate, explore and develop the hydrocarbon potential of Block 6, which is managed by EP Petroecuador; as well as the increase in supply and demand for natural gas; massive use of natural gas in possible projects for vehicle use, plant industrialization, urea production, synthetic diesel production plants, among others.

The members of the Commission said that the participation of private entities with significant experience is sought, which will finance investments and proportionately assume the implicit risk in hydrocarbon activities. The modality of the contract on integrated specific services with financing means that the state must pay a fee for gas production.

Besides, this March 6th the presidents of Ecuador Guillermo Lasso and Luis Abinader of the Dominican Republic, They agreed to begin bi-national talks, with the aim of assessing the revitalization of the Amistad natural gas field.

It’s an idea “increase the supply of this resource for the benefit of sustainable development for both nations”, President Lasso said.

Also, the two leaders agreed that there is an interest in carrying out activities of analysis, exploration and additional production of Ecuadorian crude oil, in order to meet the long-term needs of the Dominican Republic.

Previously, 34 companies presented themselves interest in friendship among them Canacol from Canada; GreenPower, an Ecuadorian company with foreign capital; Cobra from Spain, among others.

On this topic, Jorge Luis Hidalgo, manager of GreenPower, believes that there were many contradictions in the Government itself. Now, two months after the favorable report, he says, “Petroecuador has no sense of urgency and the Ministry of Energy and Mining nor since there is no call for the Board of Directors to meet and approve that tender”.

Remember that it is the minister Fernando Santos himself, who said that the field will be tendered before the end of 2022. In a December 29 communication to Azuay MP Diana Pesántez, she was told that the previous administration of Petroecuador (Ítalo Cedeño) only made the announcements And now they are doing appropriate analyzes and studies for the offer.

December 30, Jaime Garzón, Business Transformation Manager, requires budget certification for renting a studio. Two weeks later, the project was given the green light, and the need for budget certification was even removed.

For Hidalgo, with delays, “natural gas and fuel importers generally win who benefit from off-market pricing at rates of 40% to 70% greater than that of the national production of natural gas”.

These days, Nelson Jaramillo Pita from the Sycar company, a gas importer, argued the need to switch to imports, stating that the annual demand for electricity grows by 8%, while Amistad production falls to 18%, and diesel imports increase by 20%. In this sense, he said that “it is urgently necessary to import LNG and switch thermal power plants to gas. The savings for the country will be significant”.

Really, the price of gas is much lower than the price of diesel. And this issue must be taken into account when determining the rates that must be paid to a company that could be awarded a concession contract. The Petroecuador report mentions of 6 dollars per million BTU of gas (comparable unit of measurement). That’s less than the $28 per million BTU figure. What does diesel currently have? However, those 6 dollars are much more expensive than the exchange rates of other countries.

At the rate appearing in the report ($6 per million BTU), Hidalgo explains that the Henry Hub Index skyrocketed a few months ago reaching those values; but now it is $2.63 per million BTU. The official selling price in Ecuador is $3.86 per million BTU, which is even higher than the price in Colombia, $3.48, and Peru, $2.85, he explains. “It seems to me that the current price is competitive for the development of our national natural gas production.”

Enter so much there is an environmental component that Campo Amistad must overcome and that is the existence of the Ministerial Agreement no. 131, published in the Official Gazette no. 49 of August 2, 2017, expanding the boundaries of the Protected Area “Santa Clara Island Wildlife Refuge” and assigning the category “Santa Clara Island Marine Reserve. This modification could create restrictions on the development and exploration of the Amistad field and block 6, according to the report of the Petroecuador commission.

But there is also a new request to expand the Santa Clara protected area by the association of artisanal fishermen from Puerto Bolívar, says Hidalgo. For the businessman, this attracts attention because they are looking for the protection of the area with the greatest potential for natural gas in block 6. He believes that the interests of fuel importers could be present.

According to Hidalgo, Minister of the Environment, Gustavo Manrique must be an actor who holds environmental protection and our development hand in hand. “We hope to be invited to the task force because avoiding the development of gas projects in the coastal area would continue to increase diesel imports, creating an even greater impact on the environment,” he said.