2024-07-13 00:18:51
In almost two years, Petroecuador has had 10 managers. The drop in daily oil production is drastic. Of the 380 thousand barrels per day produced by the state-owned Petroecuador, it lost 7.5 million dollars in just one day, with an average price of 70 USD per barrel, as of June 24, 2024. The company’s own data shows 308,167 barrels audited and inspected by the company itself on its website.
Reinaldo Armijos was general manager of Petroecuador EP between October and December 2023. The Ecuador en Vivo editorial team spoke with the executive to understand the drop in production through June 2024, the worst drop in barrels on record in recent years.
WHAT IS YOUR READING OF THE DECLINE IN OIL PRODUCTION AS A FORMER MANAGER OF PETROECUADOR?
«The erosion of the Coca River and the closure of operations of the OCP Heavy Crude Oil Pipeline and the Trans-Ecuadorian Oil Pipeline System SOTE, at kilometer 504 in the Lumbaqui area, could have been avoided. Geological studies have been carried out for many years and the last report was ready to be executed last year, it should have started working since March, but the current executives did not do their job and the result is this. The last administration (January to May 2024) is responsible for not taking it seriously, it was controllable by engineering and studies, in 9 km engineering and topography changes had to be made, because it is known where the slopes are in the river area. That happened to us in February 2023 with the Marker River, the country lost 300 million dollars that time, all pumping was suspended for a week, that is why it is unacceptable that having the solution and the work, we fall into the same thing with millionaire losses. There is an important fact, for every 50 thousand barrels that Ecuador loses, it is 4 or 4.5 million dollars a day at an average of 67 dollars per barrel. We already have a loss currently. With twelve or thirteen days of stoppage, we lose 90 thousand barrels without producing or pumping, we lose 8.5 million dollars a day because we cannot refine, because we cannot export. The most serious thing is storage is critical, because we do not have enough tanks, we can only store for a maximum of 8 days, which means that the wells continue pumping, the tanks fill up and when there is no way to pump through SOTE and OCP, production has to be stopped, which is what is happening today.
FROM DECEMBER TO DATE, PRODUCTION IS STILL DECREASING
«When we entered in October of last year, we managed to stabilize production and raised it to 412 thousand barrels per day, we increased drilling rigs, the Master Plan for 2024 was to increase from 8 to 16 drilling rigs, normally a well gives an average of 211 barrels and of the 1,845 wells that the country has, we have less than 160 today; we were supposed to put in drilling rigs, but that plan was never carried out. Likewise, the drills that improve exploration and suction, or natural pressure, there are 8 drills, there should have been about 15 drills. Nothing was done, so the impact could have been avoided, 402 thousand barrels in January 2024, we could have generated the same upward curve, it was not done due to lack of seriousness; I want to be drastic, in a public company, you enter without a work plan, without a methodology to evaluate results, people simply resign and leave and there I am, there is this culture of “I prefer not to do anything so that I am not judged.” There is not the importance or responsibility that the country demands.
WHAT IS THE FAILURE OF THE OIL AND ENERGY POLICY OF THE NOBOA GOVERNMENT?
«The first problem was Minister Arrobo, she was not clear about her plan, she started making changes, she had a manager for just 3 weeks, when I left, I told the minister clearly that we left all the plans signed to follow with results to expect; I even left the financial statements from 2019 to date signed, which did not exist, another serious issue in this administration is that managers are not evaluated. I sent the minister a weekly report on the progress of the management and they responded that they had not asked me for that and that I should avoid sending that information that did not give them value, then I realized what the projection would be and worse, from a leader who has not managed companies. For example, in exploration and production, there is 1.3 billion of investment and it could be increased to 1.8 billion, but only in payment of rates 1 billion are spent and the rest are to provide stability, but they did not manage to execute that efficiently and that is why there is the current crisis.»
PETRECUADOR IS AN OUTDATED, INEFFICIENT AND BUREAUCRATIC COMPANY, WHAT IS THE PROBLEM WITH MANAGEMENT?
«When a new legal representative comes, he erases and goes back, he has his own idea and leaves what has already been done; in terms of the number of employees, for example, if we compare ourselves with EcoPetrol, Colombian Petroleum Company, productivity is very good, we fear a higher level of 22% per barrel, per person; there are employees who do not have the capabilities, but if you have a group of managers who do not have a permanent management evaluation, it is a mistake; the same authorities are in charge of making Petroecuador inefficient, they change people constantly and until they get to know them well, it takes 3 months (learning curve) but in no company can you change in three or six months, that is a problem.»
WHAT WILL BE THE SCENARIO BY THE END OF 2024? WILL THE COMPANY LOSE MORE MONEY DUE TO LOW PRODUCTION?
«With this decline scenario, without the ITT Yasuní field, we will have less than 58 thousand barrels less, which means 1.5 billion dollars less per year. If Petroecuador generates 14 billion USD annually, it will invoice 12.5 billion and due to current inefficiency, according to the data I was able to obtain and the macroeconomic projection for the rest of 2024, with an econometric projection, it will only invoice 10.8 billion in income, which means that to import fuel they need 2.8 billion from the deficit derivatives fund, less for next year’s budget; which means that the 7.2 billion that we normally import to cover 80% of the need for fuel will become 8.5 billion. What will happen is that the government will have to find 3.5 billion as a result of the company’s inefficiency.»