The government of Daniel Nobo Azín will be the one that will have to implement the closure of block 43-Yasuní ITT, according to the results of the popular consultation held on August 20. However, Petroecuador has already taken steps in this direction, announced Petroecuador director Reinaldo Armijos.

In this sense, the pumping of crude oil could be stopped on August 31, 2024, in accordance with the one-year time frame determined at the people’s consultation itself. From that point on, however, operations will be closed.

However, Armijos clarifies that at the moment there is no official guideline from the authorities and in this sense it is waiting to be received. He assures that Petroecuador is the executive entity of the issued policy. However, Armijos sees several obstacles and consequences in this process.

The first is the drop in tax revenues, which would amount to 680 million dollars in the first year.

He also warns that OCP – which could return to state hands next year – would lose a good amount of crude oil to pump. If it now pumps about 130,000 barrels of Napo crude oil, with the reduction of ITT, it would reach about 75,000 barrels, he indicates.

In addition, significant funds must be allocated to capping active wells and dismantling infrastructure. On this topic, there is a Norwegian company that could support the studies. The work consists not only of removing the infrastructure, but also of leaving this sector of great biological diversity as if nothing had happened.

Armijos assures that the dismantling phase could last between six and ten years.

Meanwhile, Alberto Acosta Burneo, editor weekly analysis, believes that there could still be an option for oil revenues not to be so reduced, especially at a time when the fiscal coffers are so affected. “The fiscal situation is dramatic and they don’t have the means to pay salaries,” he comments.

In this sense, Acosta says that there could be an extension of the closing period of the ITT block if requested by the new Government, in order to have a sustainable closing period. There is already a precedent for this, which happened with the Law on the Promotion of the Environment.

The problem is that it is materially difficult to meet that deadline, because it is not like turning on the faucet, but a closure project is needed, there is the whole regulatory issue of what the environmental treatment will be. All this requires funds, you have to pay compensation, and there are no funds for that.

Another alternative, although more difficult to implement, according to Acosta Burneo, would be a presidential initiative to hold consultations on the same issue, but with more information, since he believes that the Government has not presented real performance figures. “Citizens voted with unreal and incomplete information.” However, he believes that there would be no place for that, given that the president of Nobo spoke in favor of closing the ITT block.

Meanwhile, for David Almeida, general secretary of the Association of Oil Workers (Antep), the result of the consultation must obviously be fulfilled. Although “as oil workers we reject the fact that the consultation was done at the national level when it should have been done at the local level.” In any case, he warns that the question of closing the year is anti-technical. There are several factors that can cause this to take longer, for example, there are no regulations for leaving the field. It doesn’t really exist in Ecuador or anywhere in the world, because leaving the field in production is something that is not done. In this sense, he believes that generating the necessary regulations will be a very important challenge for the Ministry of Energy.

He claims production could end on August 31 as wells may be shut in. But dismantling the infrastructure is another issue that will take longer. He also explains that for a year in which production stops, it will mean about 58,000 barrels per day less production and, therefore, about $1.2 billion less in crude oil revenue. Direct jobs that would be lost are approximately 1,000, and indirect jobs, according to a study published by the Central Bank of Ecuador, 30,693. This is because the proposed scenario does not consider an active policy to counter the effects of not using Block 43-ITT. The loss of jobs in the medium term will be greater.

The central bank also projected a drop in revenue due to the closure of ITT, according to which a drop of $668 million could be recorded by 2023. Furthermore, not exploiting the field would lead to a significant loss in oil production in the block from 2023 to 2043, estimated at a total of 281.8 million barrels. This would result in a significant reduction in gross revenue of $17,634.5 million, based on an average price of $62.6 per barrel.