the president of Ecuador, William Lasso, announced that it will seek to unlink the outstanding volume of crude oil from the debt it maintains with China during a visit to that country in early February, as part of its plan to renegotiate some US$4.1 billion.
In the past decade, China became Ecuador’s main financial partner with millionaire loans tied to long-term crude oil delivery contracts, freely available loans, and millionaire investments in hydroelectric power plants and mining.
“We are going to look for the best terms and above all we are going to decouple the oil from the payment of the debt to China, so that the oil is freely available to the Ecuadorian government,” Lasso said in an interview with local radio stations.
The president said that the amount he seeks to renegotiate with his counterpart Xi Jinping it would be about US$4.1 billion. Another US$500 million have long-term conditions, so it would not enter the process.
Ecuador has signed some 16 contracts for the purchase and sale of crude oil with Asian oil companies tied to loans with Chinese banks, under conditions that, according to experts, have been unfavorable for the South American nation.
The manager of the state oil company Petroecuador, Ítalo Cedeño, said that Ecuador still has to deliver approximately 160 million barrels of crude oil to Asian oil companies until 2024.
Since Lasso took office in May of last year, he has turned to multilaterals for financing to revive the country’s economy, hard hit by the pandemic. In 2021, it renegotiated a credit agreement for US$ 6,500 million with the International Monetary Fund (IMF) and has not ruled out returning to the capital market this year.
The country expects a pending disbursement in the first quarter from the IMF and that the World Bank (WB) approve some US$700 million for the country, according to Lasso.
The Ecuadorian government will also seek to sign a memorandum of understanding to begin negotiating a trade agreement with China.
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