Joined: Aug 23, 2004 Posts: 705 Location: Frost Free in New Zealand
Posted: Sat Mar 05, 2005 1:59 am Post subject: THE Ecuador Thread (merged)
One of South America's poorest countries, Ecuador, is believed to be sitting on huge untapped reserves of oil and gas.
Much of it, though, lies beneath remote areas of the Amazon rainforest...
In global oil terms, Ecuador is a relatively small player. But revenues from its existing Amazon oil reserves are critical in keeping the country's economy afloat.
Now, with the country sitting on huge potential new reserves, there is enormous pressure to expand production.
Ecuador tribes vow to fight oil threat _________________ Let us make him who shall nourish and sustain us. What shall we do to be invoked; to be remembered in the earth.
We have tried with our first creatures but we could not make them venerate us.
So let us try to make obedient respectful beings who shall
Joined: May 15, 2007 Posts: 17 Location: Hiding in plain sight
Posted: Mon Aug 06, 2007 8:20 pm Post subject: THE Ecuador Thread
I wanted to pass along something from the "inside"...
I will post the most relevant sentences from an article, taken from the newspaper, "la Hora," of the province Tungurahua dated Aug 6, 2007.
The original Spanish will be listed along with my translation into English so you can translate it yourself if you disagree with my own.
Here is a link to the article in electronic form, but I am typing up this posting using the paper version which I bought today: Article
The title of the article is:"El sector petrolero esta frenado"
(The petroleum sector has put on the brakes)
The subtitle of the paper article states: "La incertidumbre politica y economia del pais no han contribuido para adecuar un ambiente que atraiga las inversiones."
(The political and economical uncertainty of the country have not contributed to an environment that attracts investments.)
First, the article discusses the growth of the economy, which as far
as I can tell seems to be mirroring the growth in the USA (slightly
above 0%). We use the US dollar down here, so inflation and dollar
devaluation affect us here as they do up there. Other things do factor into the economic growth, of course, but that is not relevant right to the post...
Regarding oil exports, it states: "La produccion petrolera publica se ha reducido de manera casi constante en los ultimos meses, incluyendo la correspondiente al bloque 15, lo que junto a la baja de precio del petroleo, en relacion a 2006, ha implicado la disminucion de las exportaciones petroleras (21% al comparar el periodo enero-mayo de 2006 con el de 2007)."
(The public production of oil has gone down in a nearly constant manner during the last few months, including the corresponding Block 15, which along with the the lowering of the price of oil, in relation to 2006, has created the lowering of oil exportations [21% comparing the period Jan thru May of 2006 to that of 2007]).
Because I live here, I can see that the economy is growing slightly (only 0.08%) and more and more people are own cars. Add the lack of investment into the oil production here due to the political instability (angry, tempermental president; taking away oil rights from US companies in the past year) and you have a nice example of Export Land Model, I believe it is called?
Either way you take it, I thought I would be helpful and publish an article from within the country itself, so you can see what they are saying internally.
Admitting a 21% drop in oil exports, year over year, is pretty fascinating.
PS. The online version does include the graphic illustrating Ecuador's oil exportation levels over the past 2 years, along with the oil prices. A nice roller-coaster that eerily mirrors price levels.
Online Translator: http://babelfish.altavista.com/
"Other factors of incidence
Public the oil production has been reduced of almost constant way in the last months, including the corresponding one to block 15, which next to the loss of price of petroleum, in relation to 2006, has implied the diminution of the oil exports (21% when comparing the period January-May of 2006 with the one of 2007)."
Full Translated Article
Quote:
The oil sector is restrained
13:06 - 6 of August of 2007
The Ecuadorian economy grew less of the one percent (0,08%) during the first trimester of this year, according to last numbers spread by the Central bank of Ecuador (BCE). To criterion of the understood ones, great part of this deceleration obeys to the fall of the production of crude of Petroecuador, and if urgent actions are not taken, this economic tendency could stay throughout the year.
Nevertheless, the regime hopes, in which it reduces of the year, power to change the oil situation of the state one with greater investments in this sector, the renegotiation of oil contracts, and with an impulse, mainly, to the microeconomy and the microfinances.
Nonoil sectors yes grew
For Ricardo Estrada, executive president of the Corporation for the Promotion of Exports and Inversiones (Corpei), is necessary to separate this diagnosis, because in the nonoil sectors if growth existed.
Esteem, then, that the country must begin to open new markets with its products. "We must look for penetration strategies", said.
Estrada, in addition, esteem that the uncertainty, previous to the Constituent Assembly, does not allow a greater level of investment, national as as much foreign.
Greater public cost
For the Corporation Training center and Ana'lisis (CCEA), of the Chamber of Commerce of Quito, the estimation of the growth of the Gross Internal Product for 2007 is superior to the one of the 2006, but this it fundamentally explains by the increase of the consumption and investment of the public sector that, of worrisome form, is displaced to his contrapartes prevailed.
Also, it indicates that the forecasts of the BCE indicate that for the 2007, the private consumption would decelerate in relation to 2006, and the exports would fall in a recesiva stage.
In addition, the public consumption would increase in a rate superior to the 7 percent in real terms, which surely, to its criterion, was one of the determinants of the rise of the inflation between April and June.
On the other hand, the total of societaria investment, national as as much foreign of the first trimester of 2007, has diminished with relation to the same period of year 2006. The main reason of that would be the increasing uncertainty of the companies.
Other factors of incidence
Public the oil production has been reduced of almost constant way in the last months, including the corresponding one to block 15, which next to the loss of price of petroleum, in relation to 2006, has implied the diminution of the oil exports (21% when comparing the period January-May of 2006 with the one of 2007).
The reduction of external sales is the main reason, according to the CCEA, for the accumulation of a commercial deficit of 71 million dollars, between January and May of 2007, since the traditional and nontraditional exports have grown in a 4 and 11 percent, respectively, whereas the imports increased in a 11 percent.
There is no expansive fiscal policy
The CCEA considers that during the first months of management, the present government as soon as it has initiated his expansive fiscal policy.
When reuniting the information of the Central Government and the oil bottoms (CEREPS, FACE, FEISEH), is that the cost has increased a 31 percent (USD 675 million) in the first five months of the present year, with relation to the same period in 2006.
Although the cost, that does not include the oil bottoms, grows in the mentioned period a 5 percent.
"the increase of the cost has not been of the magnitude that had loved the government, due to several bureaucratic processes that are necessary before the payment of resources. In spite of those restrictions, and of which every month important resources enter to the oil bottoms, the saving of such is diminishing (USD 109 million until May of the present year in relation to 2006)", indicates the CCEA.
Uncertain future
All this diagnosis does, to criterion of the CCEA, that the presented/displayed negative feedbacks previously, next to the political panorama that is approached, the impact of the economic policies executed and those that would be made next, as well as the omissions that imply not to apply bottom solutions to the serious problems of the national economy, make think that the horizon is not promissory.
"the time of the present government has been short, however, the uncertainty is what is primate", writes down.
ANALISIS Greater competitiveness is required Bolivar Cevallos, president of the directory of Expoflores. It is necessary to watch the lack of economic growth from two sides. The first products in which always we are growing and in that Ecuador has a potential.
The nontraditional exports in general grew in the first trimester, and are, exactly, those that helped to close the pocket of the nongrowth of the oil exports.
The ideal would be that all the activities are in constant growth, for that is needed that Ecuador acquires first competitiveness.
It must improve the infrastructure subject. We must have good routes, airports, ports. We must also improve in the subject of services. We cannot have an electrical energy more face than our neighbors.
On the other hand, we must desburocratizar. To eliminate as much papeleo that it is needed to export or for any proceeding within the country.
The investors look for a tranquillity climate, that him of confidence for the investment.
PHRASES
"there are no clear rules of the economic handling. Therefore, the economy by the side of the investment is in delay compass."
Walter Spurrier, economic analyst.
"Ecuador is a country with a great potential of development."
Eduardo Aninat, ex- minister of Property of Chile.
"It is necessary to recover the weight of petroleum in the economy."
The Faustus Ortiz, minister of Economy and Finanzas.
Economy. Growth 3,4por one hundred would grow the economy in the 2007.
Joined: Jan 06, 2006 Posts: 508 Location: Pacific Northwest
Posted: Tue Aug 07, 2007 12:08 am Post subject: Re: Recent news from within Ecuador: Exports down 21 percent
I can't seem to drink enough to dull the news. Either it ends in sickness, or I still feel it. There is always something else to know. _________________ We stand here, as the light of other days surrounds us.
"Hail the Dead"
Joined: Jun 20, 2007 Posts: 524 Location: USS Poland
Posted: Tue Aug 07, 2007 4:04 am Post subject: Re: Recent news from within Ecuador: Exports down 21 percent
I've got few questions about this subject:
1. Did Correa start nationalization effort?
2. When Equador peaked? _________________ The poor complain; they always do,
But that's just idle chatter.
Our system brings rewards to all,
At least to all who matter.
Posted: Tue Aug 07, 2007 7:55 am Post subject: Re: Recent news from within Ecuador: Exports down 21 percent
Alcassin wrote:
2. When Equador peaked?
Probably 2004
Quote:
Ecuador - 2003
Production now stands at about 400 kb/d, the capacity of the line. The depletion peak has been accordingly somewhat delayed by the limits to export, not being expected until 2004. Production is likely to have fallen to about 250 kb/d by 2020 and 80 kb/d by 2050.
From 2004 to 2005 production still increased by 1.1%, which indicates a near term peak. A new projection is made with a decline of 4% to a liquids production of 290 kb/d by 2020.
An assessment of world oil exports (info on many countries)
by Lu's de Sousa - 10 Nov 2006
http://www.energybulletin.net/22213.html
Posted: Tue Aug 07, 2007 8:33 am Post subject: Re: Recent news from within Ecuador: Exports down 21 percent
It would be interesting to see how much of the decline is due to the industry having been more or less nationalized by the newest leader. There is still a fair bit of heavy oil that is currently stranded in the NW corner of the country bordering Peru's Maranon basin and Colombia's Putamayo basin. Much of this heavy oil has decent viscosity so it flows at reasonable rates. The big issue has been the long pipeline build that would be required to get this oil to market.
Joined: Jun 20, 2007 Posts: 524 Location: USS Poland
Posted: Tue Aug 07, 2007 8:56 am Post subject: Re: Recent news from within Ecuador: Exports down 21 percent
rockdoc123 wrote:
It would be interesting to see how much of the decline is due to the industry having been more or less nationalized by the newest leader.
In Venezuela it started with sabotage and lowering production. No big deal to destroy what is not yours and frighten other investors there. Even in FSU Hubbert's linearization looks very similar. So... Aramco is also a national company.
If Ecuador peaked and they had contracted more than they produced - oh yes everybody forgot low price elasticy of supply - and that picture shows us this. _________________ The poor complain; they always do,
But that's just idle chatter.
Our system brings rewards to all,
At least to all who matter.
Joined: Sep 11, 2007 Posts: 341 Location: In freefall speed right down to the claws of the devil
Posted: Mon Sep 17, 2007 2:33 pm Post subject: Re: Recent news from within Ecuador: Exports down 21 percent
Greetings from Vzla., gn0s1s!
Interesting yet sad little detail of the sharp decrease in its oil production.
Venezuela, well, its owner, I should have said instead, is pushing your country into OPEC and into other energy related new international bodies, such that of the new "gas" producing countries alliance.
What could be the sense of it since, at the turn of few more years, there will be not too much of the production that could be exported away, from that place of yours, uhh? _________________ Only if you are interested in the real side of truth.
Joined: Jun 13, 2007 Posts: 3641 Location: Minniesotuh
Posted: Tue Oct 09, 2007 11:39 am Post subject: Ecuador to Take Bigger Oil Profits Share
QUITO, Ecuador (AP) - Ecuador's leftist President Rafael Correa decreed on Thursday that the government will take 99 percent of windfall oil profits that had previously been split with foreign oil companies.
Under a law passed last year, oil companies and the Ecuadorean government each received 50 percent of profits whenever prices on international oil markets exceeded prices established in existing contracts.
"It's the state's fundamental right to defend the country's natural patrimony and preserve the economy's sustainable growth," the Correa's decree said. …
Fernando Santos, a former energy minister, said in a telephone interview that the decree will mean "companies will have to operate at a loss, and they're not going to accept that."
The oil-reliant country, South America's fifth largest producer, produces 530,000 barrels of crude oil a day, 363,000 barrels of which comes from private oil companies. The rest is produced by state oil company Petroecuador. …
link _________________ "RRrrruuuunnnn!!!" ~Apocalypto
Posted: Tue Oct 23, 2007 10:55 am Post subject: Ecuador mulls 100% Windfall oil tax
Although it has been a relatively regular occurrence in Latin America for countries to open up to foreign investment when they are in trouble, nationalize when they are doing well and then open up again when they invariably get into trouble again I think the current trend in many countries is very disconcerting from a global peak oil perspective. The outcome of nationalization or pseudo-nationalization (where the contracts are made so difficult that foreign companies can make no profit) is that countries which might have a chance of growing their production will not be able to because of limited capital investment, lack of skilled workforce and new technology. This means there is less chance of declines in other countries being offset. Given the recent trends in many countries to make oil extraction unprofitable for oil companies in general (eg: Venezuela, Ecuador, Bolivia, Trinidad and now Alberta) coupled with places where it is already almost impossible to see profit for foreign companies (Iran, Russia, Kazachstan) the opportunities for any future additions to production profiles are more limited than they might be. The recent noise coming out of Bolivia is worrisome:
NAPLES -- Ecuador's leftist President Rafael Correa, who shocked foreign oil companies this month by taxing 99 percent of their extraordinary revenue, said he may finish the job by raising the state's take to 100 percent.
Showing no sign of wavering on the windfall tax despite Quito's talks with oil companies, Correa said the oil belonged to the people of Ecuador and urged the companies to switch to service contracts if they were unhappy with the new arrangement.
"If the companies want, there is the service contract, which is our preference — in line with the constitution that says the oil belongs to the Ecuadorean people," Correa said during a trip to Italy.
Note that for all publicly traded companies the service contracts make no sense in that they cannot report production. They recieve compensation in dollars and not oil which is viewed quite badly by the investment community. The only companies this might make sense to are private ones and even for those companies the service contracts offer zero upside during times of higher prices or if operating costs can be controlled.
Quote:
The new tax hike will cost companies about $830 million in lost revenue, according to the government, hitting the profits of some of Ecuador's largest foreign investors such as Brazil's state-owned Petrobras and Spain's Repsol.
Correa's decree raised the government's share of revenues to 99 percent from 50 percent above a set benchmark price, which the oil minister has said was around $23 per barrel.
Ecuador's measure comes against a backdrop of increasing resource nationalism around the world. Governments from Kazakhstan to Russia to Bolivia want to squeeze oil companies' profits as crude prices have soared to above $80 a barrel.
Venezuelan President Hugo Chavez, who Correa has called a "revolutionary brother", nationalised swathes of his nation's economy this year, including multibillion dollar oil projects.
Quote:
Repsol's chairman Antonio Brufau said last week he did not think it was realistic for his company to operate in Ecuador with a 99 percent windfall tax.
"It has to be said that these (negotiations) still have not started (but) as chairman of Repsol I have to say that I am concerned about the proposal," Brufau said.
Correa said he did not meet with Repsol representatives during his trip last week to Spain.
Posted: Tue Oct 23, 2007 11:17 am Post subject: Re: Ecuador mulls 100% Windfall oil tax
From Alberta's point of view, they have rapidly declining conventional production of oil and gas, and presumably an increase coming in tar sands oil production. They are making virtually nothing on tar sands oil, and if that isn't changed they'll be literally giving it away for free while their income stream dries up.
If you were running the place what would you do?
As for Equador et al, point taken...the hoarding mentality kicks in which will make the decline rate much more steep...for the oil companies it's frightening, they invest billions and years and get shut out when it becomes profitable. These leftist idiots are going to turn their countries into replicas of Zimbabwe.
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