Experts advise prioritizing the national gas industry before committing to import contracts for 25 years

The need to give priority to the national gas industry before the country agrees to fulfill gas import contracts for 25 years was one of the conclusions reached in the conversation ‘Importance of a new energy policy for the use of liquefied natural gas for power generation and other uses’, organized by the radio i99.

The opinions of Raúl Ortiz San Martín, master’s degree in Petroleum Science and Engineering, Eduardo Salgado Manzano, consultant and financial strategist, and Fausto Ortiz, former Minister of Finance, occurred in the midst of a situation in which the processes of industrialization and importation develop, but at different rates. On the one hand, the Government has announced that it will hold a tender to concession the Amistad field and its surroundings for the second half of 2022, and this morning the President of the Republic, Guillermo Lasso, announced that the Dominican Republic has proposed a strategic alliance with Ecuador for this field. On the other hand, the same Ministry of Energy has already announced at least two concession projects (Natural Gas Combined Cycle Project and Termogás Machala) that are conceived with gas imports. The Combined Cycle project is in full swing, with eight interested companies, and the Termogás Machala project received a proposal of interest from New Fortress, which in the end has been put on hold. In addition, the first imports of natural gas have already begun, in small volumes, by the Sycar company.

So for Raúl Ortiz San Martín yes there is more potential for natural gas in Campo Amistad, located on the Ecuadorian coast, which could supply one or two power plants. However, he commented that for years it has been neglected and no new wells have been drilled. In this sense, he said that it is important that it be done through expert companies. In any case, he indicated that the Petroecuador has said that there are other potential fields near Amistad that could increase production by up to 400%. For this reason, he explained that it is important, before committing to importing gas for 25 years, to request a technical evaluation to see the possibility of boosting the national industry. Local production would cost less and could benefit the consumer.

Ortiz San Martín argued that the investment in Campo Amistad should be private, and recalled that Petroecuador has already made an investment of $600 million. This experience was a failure, perhaps due to lack of expertise and also due to high costs, since drilling each well cost $50 million, when the private company EDC (which was the company that managed the field and to which the expiration of the contract in the government of Rafael Correa) did it in $ 8 million.

Additionally, the expert considered that foreign investment for this project would not arrive if the government previously reaches agreements on concessions to thermoelectric plants that will import natural gas, as it would be a disincentive. This is because thermoelectric plants are the natural market for the gas produced by Amistad. He clarified that “It is not that there are no imports, but that they are complementary to national production.”

Meanwhile, Eduardo Salgado considered that the State must implement a comprehensive energy policy where natural gas is also taken into account. At least that’s how it is in neighboring countries that produce significant natural gas. For example, Colombia is producing 1,000 million cubic feet. Peru is also exporting 1,000 million cubic feet; while Ecuador barely reaches 25 million. For Salgado, the Government must plan in the long term what the cost of energy will be and look for one so that energy is cheap and guarantee its provision. And he commented on the case of Germany, which by making wrong political decisions has ended up being dependent on 40% of Russia’s energy.

Ortiz recalled that gas waste is generating a loss of $800 million. He considered that the Government can turn around the policy that has been carried out up to now on natural gas and leave a traced route. (I)