Ecuador's Minister of Energy discusses new investment opportunities in Oil & Gas
In this interview, H.E Rene Ortiz, the honorable Minister of Energy and Non-Renewable Natural Resources of Ecuador discusses Ecuador's hydrocarbon potential, the new opportunities that privatization is creating for investors, his presentation at the Global E&P Summit and the country’s role as an energy hub.
Ecuador possesses the third largest oil reserves in South America, and is one of the main producers in the region. Everyone's looking at Ecuador right now, and its tremendous growth in the past decade. How have you managed to achieve this growth?
Ecuador’s hydrocarbons industry has been developing since the 1970s, when the upper Amazon basin showed tremendous oil potential. It was actually discovered and developed by the Texaco Golf Consortium in those years, and then little by little, more companies came in and participated. Since then, Ecuador has never stopped opening new business opportunities in its hydrocarbons industry.
Ecuador was always open. There were times in which we may have been seen as more active than others. Today, the government considers it of vital importance and an utmost priority to take advantage of the tremendous potential of natural resources we possess. This means that mining is under the jurisdiction of the Ministry of Energy and Non-Renewable Natural Resources, together with electricity and oil and gas. These industries are actually the basis -the sustainability - of dollarization in Ecuador.
Investment opportunities in oil & gas
What's available for investors in the upstream, midstream, and downstream? Are there any projects Ecuador is looking for investment in right now?
Regarding oil and gas, we are opening new opportunities in E&P, through the use of a Production Sharing Model.
Then we have the electricity sector, which is also very open to new investment as we have a very substantial amount of rivers, which can be utilized as hydroelectric power-generating projects.
See, Ecuador is really blessed with natural resources. What we need is to pass the message to the international business community: “We are reopening.”
Regarding the downstream opportunities in oil and gas, we also are looking at investments, specifically through the transfer of enterprises from the State to the private sector. Our main priorities there are the new levels of administration and operation international investors can bring.
As a Ministry we believe that public industries should be developed with an entrepreneurial eye and spirit, as an industry: Constantly updating, using new technologies, new methods, innovation.
So, most of this downstream segment of the oil industry requires a lot of upgrading, including high conversion operating in the oil industry.
Then you have all this electricity, lots of opportunities to gain the same type of modality: administration and operation. And in the mining sector- this is our new baby.
We are currently testing Ecuador in the world of mining. The last quarter of 2019 was its startup in an industrial scale. Regardless of the COVID-19 pandemic, Ecuador started exports during the first quarter of 2020.
Ecuador's success during the Covid-19 pandemic
How is the impact of COVID-19 in Ecuador? You mentioned earlier that it hasn't impacted you greatly in terms of business and trade.
Once the pandemic was declared by the government, confinement took place immediately. These three segments, mining, electricity and oil were the exception.
We will not stop. We will not be paralyzed. I told every industry - because the private sector is very large in Ecuador - we have a good opportunity to display the development of these industries working together with the private sector. So we never stopped. We may have had some difficulties in some cases, but we continued the transportation of oil and electricity through the networks.
There were no interruptions to the energy exported to our partners, Colombia and Peru.
Ecuador's role as an oil & gas midstream hub
Incredible. You have all the infrastructure in place and you have the partnerships in place with Columbia and Peru. How is the future of this partnership looking? How are you working together with these two very important countries, not just for Latin America, but also for the world, to ensure that you are making optimal use of your resources?
There is an international organization called OLADE, with its headquarters in Quito, Ecuador. OLADE primarily promotes integration between us. We have already succeeded in integrating our power grids, with Colombia and Peru.
And that is part of the solution. Now the question is how do we increase that? Because the needs for electricity in the Southern part of Colombia and the Northern part of Peru are also high. Right now we have a major opportunity for electricity generation and exports investors.
Since Ecuador is a dollarized economy: Take advantage. This is a message to the investors: Take advantage. Ecuador is a dollarized country and you don't have to worry about exchange rates.
The Global E&P Summit and Ecuador's EOR opportunities
Why did you decide to speak at the Global Exploration and Production Summit? Could you tell us a bit more about this?
What we are looking for is an audience that is ready to listen to the business opportunities in the hydrocarbons industry, in upstream, midstream and downstream. These are already ongoing businesses which will be transferred to new investors. This is part of our policy, which is monetisation. We would like to monetise these industries. These are already ongoing businesses, but instead of being run by the public or by the State Company they will be run by the private sector.
Especially in upstream there are businesses which require a lot of Enhanced Oil Recovery techniques. The oil is there, the infrastructure is there, but the state company has no money to actually introduce the EOR techniques, to get more out of those oil fields.
These are now open for the private sector. Take advantage. These are ongoing businesses.
In addition to pure grassroots, E&P exploration and production, we have three major regions for E&P, new E&P.