Ecuador Declares Force Majeure for Oil Exports, Output Due to Erosion

QUITO (Reuters) — Ecuador's government on Monday declared force majeure over its oil exports and production contracts after ongoing erosion in its Amazon region forced a halt to pumping on two pipelines.

The declaration will allow the implementation of contingency plans, the energy ministry said in a statement.

The erosion is taking place along rivers in the Amazon province of Napo, home to the privately-owned heavy crude oil OCP pipeline and the 360,000 barrels per day state-owned SOTE pipeline. OCP can flow up to 450,000 bpd, but it only transports 180,000 bpd.

Both pipelines decided to suspend pumping last week as a preventive measure in the face of the advance of regressive erosion along the Coca River. The two entities added that they would build variants in their pipes to avoid the impact.

There was no data on production and exports affected by the force majeure. Ecuador's crude production averaged 485,000 bpd before the force majeure. On Sunday, output fell to 251,118 bpd, according to government data.

Ecuador's energy ministry said in a statement that the state-owned Petroecuador will carry out a progressive shutdown of wells, which would result in the closure of some fields.

"Action and contingency plans are already underway to minimize the impact of the situation through the hydrocarbon chain: exploration, production, refining and industrialization, transportation and storage, and internal and external commercialization of hydrocarbons and their derivatives" added the ministry.

In April 2020, both pipelines in the country suffered a pipeline rupture due to the sinking of land in the area, which led the country to declare force majeure in its exports and lower its production levels.

Petroecuador has built six variants of the SOTE and is in the development of the seventh. While OCP Ecuador has eight temporary and two permanent variants in operation.

Regressive erosion along the Coca River began last year and has also threatened the water catchment of the Coca Codo Sinclair hydroelectric plant, the largest in the country, already closed one of the main roads that connects the capital Quito with the Amazon.

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