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Latino Daily News

Saturday August 11, 2012

Peruvian Pipeline to Transport Ecuadorian Crude from Amazon

Peruvian Pipeline to Transport Ecuadorian Crude from Amazon

Photo: Peruvian pipeline

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Ecuador will use a Peruvian pipeline to transport crude extracted from the southern part of its Amazon region, the Non-Renewable Natural Resources Ministry said.

Ecuador secured the right to use the North Peruvian Pipeline via an agreement signed Wednesday by the country’s hydrocarbon secretary, Andres Donoso, and the head of state-owned Peruvian oil firm Petroperu, Pedro Mendez Milla.

Non-Renewable Natural Resources Minister Wilson Pastor, who attended the signing ceremony, hailed the bi-national accord as “true energy integration, in which two countries, Ecuador and Peru, are joining forces and needs.”

He said Ecuador will pay an initial transportation fee of $10 per barrel of crude extracted from the southern zone of the Ecuadorian Amazon.

Mendez said for his part that the agreement marks an “important milestone” because of the complementary effort it entails in the probable extraction and transport of Ecuadorian crude.

He added that the agreement will allow Peru to make greater use of its infrastructure while boosting business levels.

Ecuadorian and Petroperu representatives also signed a confidentiality agreement that will allow the Peruvian firm to participate in bidding for drilling concessions.

Pastor said the Ecuadorian oil to be pumped via the North Peruvian Pipeline is to be extracted following the so-called 11th Bidding Round, which is scheduled to take place on Oct. 24.

The Ecuadorian minister estimated the production potential of the oil fields to be auctioned off in that round at 35,000 barrels per day.

He said exploration studies to be carried out after the auction would likely cause reserves in that region - currently estimated at 100 million barrels - to rise to between 800 million and 1.5 billion barrels.

Under that scenario, production in that zone could amount to between 400,000 bpd and 500,000 bpd, Pastor said.

A conduit extending approximately 100 kilometers (62 miles) will be built to link the fields in Ecuador’s southern Amazon region to the North Peruvian Pipeline, which runs to the Bayovar port in northern Peru.

Pastor estimated the cost of the conduit at $300 million.

The North Peruvian Pipeline currently transports between 200,000-250,000 barrels of crude per day, roughly half its maximum capacity.

Most of Ecuador’s oil comes from the northern part of its Amazon region, where 500,000 bpd are extracted and transported via the SOTE and OCP pipelines.

Oil is Ecuador’s main export product and also a key source of government revenue.