Conflict of interest revealed between Petroecuador and Flopec regarding contracts with Amazon Tankers

Controversy about exclusive contracts on the transportation of crude oil through Flopec EP (established by law), that they generated losses to the state company itself in the administration of Jaime Condoy ($6.1 million) during the government of Lenín Moreno, and this is the cause of the current impeachment process of President Guillermo Lasso; he put another reality into the discussion.

there is a conflict of interest or cross interests between Flopec EP and EP Petroecuador. ANDthe transportation monopoly Flopeca, through which the company established high rates for its best revenue, ends up affecting the company Petroecuador, from which the companies that buy crude oil end up charging those values ​​in the differential. This was explained by representative Fernando Villavicencio, who chairs the Supervisory Commission that conducts the aforementioned impeachment trial.

The lawsuit for fraud in Flopec’s contracts was already submitted to the prosecutor’s office by the government of Guillermo Lasso himself in his first months of administration

According to Fernando Villavicencio, the fundamental problem is “that the interests of the two public companies intersect, Petroecuador is asking to hire large ships so that the fuel and crude oil traders do not pass on to them higher transportation costs through the difference. While Flopec seeks to charge a higher rate, it is important for more revenue.” In the end, if Flopec wins, Petroecuador loses and vice versa. For this reason, for Villavicencio, Flopec should become the maritime branch of Petroecuador and act in accordance with the interests of the state in general.

There are four types of ships on the transport market, classified according to cargo capacity: Panamax (360,000 barrels) Aframax (720,000 barrels); Suezmax (1,080,000 barrels) and VLCC (2,160,000 barrels). The larger the ship, due to economies of scale, the cheaper the transportation per barrel of crude oil. The per-barrel prices appear in a recent request for a special inquiry sent by Villavicencio to the Comptroller’s Office to examine what happened to shipping contracts involving several Flopeco-related crude oil shipping companies (Amazon Tankers, Andes Tanker, Agoyán Tanker and Galapagos Tanker.

These rates are:

Despite the fact that for Petroecuador the price with larger vessels is more favorable, transport from Ecuador is mostly carried out by vessels Panamax and Aframax that charge higher prices. The reason is that Flopec owns these ships or is associated with companies that own them.

For just a few months, from 2021 to September 2022, when Pablo Noboa was the international trade manager, some crude oil sales transfers were made via Suezmax and VLCC. This was achieved through an agreement with OCP so that Petroecuador can also use the port of Punta Gorda, which due to its geographical conditions allows the entry of deep-draft ships. These operations were even achieved with a reward for the company.

The political trial of President Guillermo Lasso will have restrictions on embezzlement charges

Even while Pablo Noboa was leading that administration, an agreement was reached with Flopec that the company would include these large ships in its operations. Thus, Flopec reports in July 2022 that the request for Suezmax and VLCC type ships “We confirm that, in accordance with the quantities specified in your letter number PETRO-CIN-2022-0449-O, we have started the process of installing the three ships in such a way that they will be ready in the country from next August.” Unfortunately, that didn’t happen. Instead, Noboa exited and there have been no new sales through Punta Gorda since. The issue of the possibility of using larger ships was even part of the renegotiations that were made with Petrochina, in order to reduce transportation costs.

According to statistics managed by Petroecuador, 268 boat trips were made between January 2022 and March 2023 Aframax, which is equivalent to 78.36% of the total number. Next are Panamax voyages which were 66, which is equivalent to 19.30% and only 8 in Suezmax, 2.34% of the total (which were at the time of Nobo).

When consulted Petroecuador why no contracts were concluded with Suezmax or VLCC ships, He explained that the company “is allowed to use Panamax, Aframax and Suezmax ships in long-term contracts with Petrochina”. However, it indicates that since the contracts are FOB and due to the Cargo Reservation Act, buyers must deliver their shipments strictly in agreement with EP Flopec. Therefore, shipments are made via Aframax and are not exported using Suezmax vessels, since Flopec does not have this type of container available. “EP Petroecuador manages exports in accordance with the logistical and operational coordination maintained by Flopec and Petrochina,” the company said.

Meanwhile, in the special review request that Villavicencio made to the Comptroller’s Office On March 30, it was explained that the representative Mireya Pazmiño, one of the sponsors of Las’s trial, He opposed the renegotiation of contracts with Petrochina, because in the renegotiation process Petroecuador asked Flopec to install larger ships such as Suezmax and VLCC to transport Ecuadorian crude oil to Chinese and Asian refineries.