The new manager of Petroecuador(s), Eduardo Xavier Miranda Patiño, who recently replaced Reinaldo Armijos, took office for the first time by officially declaring the tender for the concession of the Amistad gas field void. In this way, the third failed attempt to give the said field into concession is realized, which has the potential to create more gas production, which would go to Termogás Machala, mitigating the problems of future power outages.

Letter no. PETRO-PGG-2023-1297-O dated December 13, 2023, two days after assuming office, Miranda Patiño responded negatively to the appeal request of the Green Dynamics consortium, the only remaining bidder interested in the concession of the process and which requested a review of the decision of the Technical Commission which concluded that the company does not meet the conditions of the 1st stage of the tender.

Within the press release, Miranda Patiño states that according to the regulations, “Under no circumstances will the Evaluation Committee require the validation of documents or information that are not listed in Envelope 1; nor will it require interested companies to justify conditions that are not provided for in the terms of reference.” It is also said that “documentation that is missing or that is presented without meeting the conditions established in the terms of reference (…) will not be subject to error checking.”

In this regard, he said that the Public Administration “is prevented from reviewing and evaluating the documentation attached to the letter received on December 10, 2023, since it was delivered outside the deadline and is not part of Envelope 1 submitted by the Promise. Green Dynamics Consortium”.

The conclusion states: “This administration confirms what was reported by the Evaluation Committee that the Green Dynamics consortium, consisting of Green Power International and Sociedad Mercantil Repstim, did not pass Phase 1.”

In this way, the competition seems non-existent. And this in the middle of the power crisis that occurs, among other things, due to the lack of production of thermal energy, which comes from diesel, gas or fuel oil. In the case of Ecuador, thermal energy usually comes from diesel. Now we were looking for engines in fuel oil, but there is also a thermogas option that requires natural gas. In this sense, it is considered important to give way to greater local gas production. But they preferred to ask for imported gas, even though this tender held a few weeks ago also failed.

Third failed attempt

This is not the first time that the Campo Amistad concession has had problems. Since 2018, an attempt has been made to call for a tender to increase the field, knowing that there are large reserves. However, there were constant obstacles. Former energy minister Carlos Pérez announced a tender, but there were no bidders because the conditions were unattractive. As far as I can remember, the conditions were difficult to meet because there was a fixed price per drilling and payment was made only if there was success. With the arrival of other ministers, such as René Ortiz, it was ensured that there were no gas reserves. And this despite the reports from Petroamazonas which said that there are three times more planned reserves.

As soon as former president Guillermo Lasso came to power, a portfolio of investment projects was opened, including Campo Amistad. Petroecuador’s manager at the time, Italo Cedeño, sought to promote him in January 2022 and was said to be ready for November 2022, but was finally left in limbo when Cedeño was separated, amid a scandal surrounding his wife’s involvement in the state-owned company’s decisions.

When Hugo Aguiar took office, he postponed some projects, including Campo Amistad. When he left office, the tender was held with Ramón Correa at the helm in August 2023. After four months, it was declared invalid again.

On that subject, Jorge Luis Hidalgo, joint attorney of Green Dynamics, the company that was trying to come to an end, regretted the decision of the new manager. He assures that the consortium meets the required conditions, but explains that the problem arose because the project tasks were changed in the middle of the process and were not clearly communicated to the participating companies. In this sense, he said that the alleged omissions are completely valid. In this sense, he points out that the change of the TDR was not legal, but despite this, his consortium meets the conditions with the said change, but the corresponding documentation was not presented because it was not among the required conditions. “We didn’t know about the TDR changes until they qualified us and said we weren’t in compliance,” he said.

So five years of experience and a net worth of $30 million is required depending on the percentage of participation in the consortium. It fulfills Green Power.

Hidalgo said this will cause future problems of new blackouts, as gas for Termogás Machala is not guaranteed. In this sense, the question was raised whether the new official will take responsibility for the lost profit that this decision will cause. For Hidalgo, the only gains from this procedure are gas importers.

The only company in the competition will participate again

When asked if they would participate again in a possible new concession, he answered in the affirmative, but it would be requested that the rules not be changed half-heartedly and that, if this happens, they should be explicitly informed about it. “What happened to our investors seemed frivolous,” he said.

What happened with Campo Amistad is reminiscent of what happened in March of this year, when the tender to collect lighter gas also failed. It was a project that sought to get a private company to invest in the exploitation of gas that is burned in flares and pollutes the environment. The Minister of Energy at the time, Fernando Santos, announced that the tender was declared invalid due to problems in the process that was announced by the Petroecuador company itself. And this despite the fact that a qualified company (Amazon Tech) already existed and was the virtual winner.