Ecuador’s President Daniel Noboa struggles with his oil revival plan for the Sacha field while preparing for a runoff election. Criticism of his deal with Sinopetrol has intensified, leading to a finance minister’s resignation and concerns over the consortium’s competence. Noboa’s ultimatum for an early payment may jeopardize the agreement as he faces a political challenge from rival Luisa Gonzalez.
Ecuador’s President Daniel Noboa is facing significant challenges with his plan to revitalize the nation’s largest oil field, Sacha, as he prepares for a runoff election. The agreement made last year with Sinopetrol, a consortium of foreign oil firms, has come under fire, leading to his finance minister, Juan Carlos Vega, resigning amidst the turmoil. Noboa’s presidential rival, Luisa Gonzalez, has pledged to cancel the deal if she wins the election on April 13.
The success of Sacha’s revival relies heavily on foreign investment, but critics from various political backgrounds question both Noboa’s strategy in managing the asset and the competence of the Sinopetrol consortium, which consists of Amodaimi (part of Sinopec) and Canada’s New Stratus Energy. Concerns center around whether the consortium has sufficient funds and expertise to enhance production capabilities.
In light of increasing scrutiny, Noboa has threatened to terminate the contract unless Sinopetrol delivers a $1.5 billion entry bonus by March 11, ahead of the agreed timeline. This move is viewed by analysts as a potential strategy to distance himself from the controversial deal to bolster his election campaign after a narrow victory over Gonzalez by just 15,000 votes in the first election round.
Sebastian Hurtado, a political risk expert, noted that while Noboa has already sustained damage to his campaign, he is attempting to mitigate further losses. Former Oil Minister Fernando Santos described Noboa’s ultimatum as a way to gracefully exit the negotiations. Although Noboa’s administration did not provide immediate comments, the president reiterated the importance of the impending payment during a recent event in Guayaquil.
Increasing production at Sacha could provide a critical revenue boost for the eventual election victor, and the immediate $1.5 billion influx could significantly aid Noboa’s fiscal strategy, irrespective of long-term outcomes. Efforts to augment Ecuador’s oil capacity to 1 million barrels per day have consistently faltered due to financial instability, bureaucratic issues, and conflicts with foreign companies. Currently, Petroecuador is responsible for 80% of output, with foreign entities supplying the remainder, while production has dropped by 15% since hitting a peak in 2014.
President Daniel Noboa’s oil revival plan for Ecuador faces significant jeopardy as he nears a crucial re-election. Controversies surrounding the Sacha field deal with Sinopetrol, coupled with a looming ultimatum for an upfront payment, have fueled criticism and political challenges. With foreign investment critical for recovery and past production declines, the outcome of the election remains uncertain as both Noboa and his opponent seek to navigate these complex issues.
Original Source: worldoil.com
