By Alexandra Valencia
QUITO (Reuters) – The deadline for a Chinese-Canadian consortium to pay a $1.5 billion upfront payment to Ecuador in order to develop the country’s most productive oil block has passed, the energy minister said on Wednesday, seemingly scuppering the deal.
President Daniel Noboa, who is seeking re-election in April, had said the consortium, made up of subsidiaries of Chinese state energy giant Sinopec and Canada’s New Stratus Energy, had until Tuesday night to make the payment and that the deal would not go ahead without it.
The energy ministry awarded the 20-year contract for the northeastern Sacha field – which pumped 77,000 barrels per day (bpd) last year – without a public bidding process.
Unions, Indigenous organizations and opposition politicians have criticized the awarding of the contract and questioned whether Amodaimi Oil Company S.L., the Sinopec subsidiary, and Petrolia Ecuador, the New Stratus subsidiary, have the technical and operational capacity to operate the block.
“There is nothing else to say, simply that the deadline expired,” energy minister Ines Manzano told local television Ecuavisa on Wednesday morning, adding that the government was weighing other options.
The government has said it does not have the funds or the technology necessary to increase production at Sacha.
Petrolia, the only member of the consortium which has commented publicly on the deal, said it had no immediate comment.
The Chinese embassy in Ecuador said in a statement on its website: “We hope all parties concerned will continue to promote project cooperation on the basis of mutual benefit and win-win results.” It added that it does not interfere in business conducted by Chinese companies.
The contract included $1.7 billion in investment and a plan to increase output from the field to 100,000 barrels per day within the first three years.
The authorities had said that despite clauses which would have determined production distribution based on the price of oil and levels of extraction, government take from the project’s income, including the upfront payment, taxes and charges for transport, would have been about 82%.
(Reporting by Alexandra Valencia; Writing by Julia Symmes Cobb; Editing by Hugh Lawson)
