Ecuador President Daniel Noboa faces criticism as his oil revival plan for the Sacha field falters ahead of his re-election bid. With his finance minister resigning over the deal and his competitor vowing to revoke it, Noboa’s recent ultimatum to Sinopetrol raises questions about his intentions and the future of foreign investment in Ecuador’s oil sector.
Ecuador President Daniel Noboa’s initiative to rejuvenate the Sacha oil field is deteriorating as he needs to secure re-election ahead of an impending runoff vote. After granting Sacha’s control to Sinopetrol, a consortium consisting of international firms, critical scrutiny of the deal has surged, particularly after the resignation of Finance Minister Juan Carlos Vega, due to public dissatisfaction with Noboa’s management. His rival, Luisa Gonzalez, has pledged to cancel the contract if elected in the upcoming runoff on April 13.
Revitalizing the Sacha field, essential for Ecuador’s troubled economy, relies on foreign investments. Critics, including political opponents across the spectrum, have voiced concerns regarding Noboa’s strategy to secure an operator and have raised doubts regarding Sinopetrol’s financial capability and expertise to enhance production. The coalition, including Sinopec’s Amodaimi and New Stratus Energy Inc.’s Petrolia, remains under scrutiny.
In a significant turn, Noboa threatened to terminate the agreement unless Sinopetrol pays a $1.5 billion entry bonus earlier than stipulated by March 11. This swift deadline complicates matters for the consortium and suggests that Noboa may be attempting to sabotage the deal to bolster his electoral campaign after narrowly leading Gonzalez by a mere 15,000 votes in the initial election round.
Political analysts indicate that Noboa’s actions reflect a desperate attempt to mitigate criticism, with the head of the political risk consultancy Prófitas suggesting he is working to limit losses post-controversy. Noboa’s office has not responded to requests for comments; however, he affirmed the deadline commitment during an event in Guayaquil, stating, “We are going to keep our word. If the bonus isn’t paid tomorrow, then it won’t go ahead.”
Increased output from Sacha could provide essential funding for the presidential candidate that emerges victorious. However, the immediate financial injection from the $1.5 billion would benefit Noboa’s administration, regardless of the contract’s long-term advantages. Historically, officials have sought to raise Ecuador’s oil output to 1 million barrels per day, but obstacles like financial turmoil, bureaucratic inefficiencies, and disputes with foreign firms have derailed those plans. Currently, production from the Sacha field has dropped by 15% from its peak in 2014, with Petroecuador now accounting for 80% of the nation’s oil output alongside other mostly foreign companies.
In summary, President Daniel Noboa’s plans to revive Ecuador’s Sacha oil field are under significant threat due to mounting political pressure and the focus on re-election efforts. The critical concerns surrounding the financial and operational capabilities of the foreign consortium, combined with Noboa’s ultimatum for early payment of the contract’s entry fee, create a precarious situation for both the proposed deal and his candidacy. With historical challenges in Ecuador’s oil sector, the future remains uncertain as the election draws closer.
Original Source: worldoil.com
