Ecuador’s President Daniel Noboa’s oil revival plan at the Sacha field is under scrutiny due to political pressures as he seeks re-election. Criticism has arisen regarding the agreement with Sinopetrol, resulting in a finance minister’s resignation. Analysts speculate Noboa’s imposed deadline for the entry bonus aims to undermine the deal’s viability, potentially to safeguard his campaign interests.
Ecuador’s President Daniel Noboa’s initiative to rejuvenate the Sacha oil field is faltering as he seeks reelection prior to an impending runoff. Following a deal last year with Sinopetrol, a consortium of foreign firms, Noboa has faced escalating criticism regarding the management of this arrangement. His finance minister, Juan Carlos Vega, has resigned amid the backlash. Additionally, socialist candidate Luisa Gonzalez has pledged to revoke the deal if elected on April 13.
The Sacha field’s revival hinges on foreign investment, which has brought forth criticism from various political factions regarding Noboa’s selection process for an operational partner. Doubts have been raised concerning the consortium’s financial capabilities and expertise, consisting of Amodaimi from China’s Sinopec and Canada’s New Stratus Energy Inc. In light of this controversy, Noboa issued an ultimatum demanding a $1.5 billion entry bonus from Sinopetrol by March 11, a timeline considered unfeasible by analysts who suspect he may be sabotaging the deal to protect his campaign after a tight initial election result against Gonzalez.
Sebastian Hurtado, a political risk expert, commented, “The damage has already been done, but he’s limiting his losses.” Meanwhile, the former Oil Minister, Fernando Santos, suggested that Noboa’s ultimatum serves as a tactful approach to conclude negotiations. Noboa has not responded to these criticisms; however, he confirmed the deadline during a recent event, emphasizing the necessity of the entry bonus for the deal to proceed.
Increasing Sacha’s production is pivotal for the incoming administration, as the $1.5 billion would provide immediate financial support, regardless of the long-term advantages of the deal. Efforts to elevate Ecuador’s oil output to one million barrels per day have been consistently hindered by financial instability and bureaucratic issues. Notably, production from the Sacha field has declined by 15% since its peak of 560,000 barrels per day in 2014, with Petroecuador currently responsible for 80% of the production, while the remaining share is supplied by a mix of foreign companies.
In conclusion, President Daniel Noboa’s oil revival plan faces significant challenges as the deadline for the entry bonus draws near amid a contentious electoral climate. His unilateral actions have elicited criticism from various quarters, questioning both the financial acumen of the new consortium and the viability of the deal. The outcomes of the upcoming election and Noboa’s approach to foreign investment will be pivotal in determining Ecuador’s economic trajectory moving forward.
Original Source: worldoil.com
