Ecuador’s President Daniel Noboa’s plan to revitalize the Sacha oil field is faltering as he scrambles for re-election. Criticism has emerged over his handling of the Sinopetrol deal, including a finance minister’s resignation and threats to cancel the contract. The situation raises questions about Noboa’s motives, impacting Ecuador’s economy and oil production efforts.
Ecuadorian President Daniel Noboa’s initiative to revitalize the Sacha oil field is encountering significant obstacles as he approaches a crucial re-election. Following last year’s agreement to transfer control of the Sacha field to the Sinopetrol consortium, Noboa has faced escalating criticism regarding this arrangement. His finance minister, Juan Carlos Vega, has resigned, highlighting discontent with the deal, particularly as socialist candidate Luisa Gonzalez pledges to revoke it if victorious in the upcoming runoff election.
The potential recovery of the Sacha oil field is essential for stabilizing Ecuador’s economy; however, critics argue that Noboa’s strategy for securing an operator is flawed. There are doubts regarding whether the Sinopetrol consortium, comprised of Amodaimi, a Chinese subsidiary, and Petrolia from Canada, possesses the financial resources and expertise necessary to enhance production effectively. Amid the turmoil, Noboa has demanded that Sinopetrol expedite a $1.5 billion entry fee by March 11, ahead of the original agreement, raising concerns about his motives in light of the impending election.
Sebastian Hurtado, the head of political risk consultancy Prófitas, remarked on the situation, suggesting that Noboa’s preemptive actions may merely be an attempt to mitigate his losses politically. Former Oil Minister Fernando Santos has described Noboa’s ultimatum as a possible justification to terminate the negotiations gracefully. Although Noboa has not publicly commented on the controversy, he reaffirmed the pressure on Sinopetrol regarding the payment during a recent event, indicating a commitment to honoring the deal.
The Sacha oil field’s increased production could financially benefit whoever ultimately wins the election. The immediate $1.5 billion sought would provide a crucial financial boost for Noboa, irrespective of the long-term gains from the agreement. However, Ecuador has grappled with various factors, including economic instability and bureaucratic challenges, which have hindered efforts to elevate oil production to the targeted level of 1 million barrels per day. Currently, production has seen a 15% decline from its peak in 2014, with Petroecuador contributing 80% of total output, and the remaining share produced by various foreign entities.
In summary, President Daniel Noboa’s oil revival plan faces significant challenges as he seeks re-election. With criticism mounting over the management of the Sacha oil field deal and early demands for payment from Sinopetrol, questions arise regarding the viability of the arrangement. The outcome of Noboa’s efforts may influence both his electoral prospects and the future of oil production in Ecuador.
Original Source: worldoil.com
