Ecuador’s President Daniel Noboa’s effort to restore the Sacha oil field is faltering due to mounting criticism and a looming election. His demand for an early $1.5 billion payment from the consortium Sinopetrol has raised skepticism regarding the deal’s viability. This situation is compounded by the threat of cancellation from the opposition candidate, Luisa Gonzalez, if elected.
Ecuador President Daniel Noboa’s initiative to revitalize the Sacha oil field is faltering amid his efforts to secure re-election just weeks before a runoff vote. The agreement made last year with the consortium Sinopetrol, which comprises foreign oil companies, has faced severe criticism. Following the backlash, Noboa’s finance minister, Juan Carlos Vega, resigned, highlighting the internal strife over the deal. Furthermore, socialist candidate Luisa Gonzalez has pledged to cancel this arrangement if she wins in the upcoming election on April 13.
The revitalization of Sacha is crucial for Ecuador’s struggling economy, yet Noboa’s strategy to attract foreign investment has drawn significant scrutiny. Critics question whether the consortium—composed of Amodaimi, a subsidiary of Sinopec, and Canada’s New Stratus Energy Inc.—possesses the necessary financial resources and expertise. Amidst these tensions, Noboa raised the stakes by demanding a $1.5 billion entry bonus to be paid by March 11, which is considerably earlier than previously agreed upon. Analysts suggest that this demand may be a tactic to undermine the deal as Noboa strives to bolster his campaign after a narrow victory in the first election round.
Sebastian Hurtado, head of Prófitas, stated, “The damage has already been done, but he’s limiting his losses,” while former Oil Minister Fernando Santos characterized Noboa’s ultimatum as a method to “end the negotiations elegantly.” Although Noboa’s office did not respond to inquiries, he reinforced his stance at a recent event, insisting, “We are going to keep our word.” The failure to receive the bonus could jeopardize the deal entirely.
Increasing production from Sacha would yield significant revenue for the forthcoming administration, providing an immediate fiscal boost through the anticipated $1.5 billion. Historically, Ecuador has sought to elevate its oil output to 1 million barrels per day, yet challenges such as financial instability and bureaucratic inefficiencies have stunted progress. The output from the Sacha field has declined by 15% from its 2014 peak, with Petroecuador accounting for the majority of the country’s oil production, while numerous other companies contribute to the total.
In conclusion, President Noboa’s plan to rejuvenate Ecuador’s Sacha oil field is encountering significant challenges as he grapples with the forthcoming election. Key criticisms regarding the management of the Sinopetrol contract and escalating pressure for an early payment deadline have complicated matters, heightening uncertainty in the oil sector. The outcome of this situation may greatly influence the fiscal health of the future government and the nation’s economy.
Original Source: worldoil.com
