Ecuador is one of Latin America’s largest oil exporters, with net oil exports estimated at 305,000 barrels per day (bbl/d) in 2009. The oil sector accounts for about 50 percent of Ecuador’s export earnings and about one-third of all tax revenues. Despite being an oil exporter, Ecuador must still import refined petroleum products due to the lack of sufficient domestic refining capacity to meet local demand. As a result, the country does not always enjoy the full benefits of high world oil prices: while these high prices bring Ecuador greater export revenues, they also increase the country’s refined product import bill. In 2007, Ecuador re-joined the Organization of the Petroleum Exporting Countries (OPEC), after leaving the organization at the end of 1992. Ecuador is the smallest oil producer in OPEC, with an assigned production quota of 434,000 bbl/d. OPEC quotas combined with an uncertain investment climate have had a negative impact on international investments and oil production, severely impacting Ecuador’s economy. In this climate, government budget support has come in the form of Chinese oil-backed loans, whereby the Chinese government provides infrastructure loans in exchange for oil contracts (often at a discount to market prices).
Total energy consumption by type
Ecuador’s energy mix is largely dependent upon oil, which represented close to 80 percent of the country’s total energy consumption in 2007. Hydroelectric power represented 19 percent of total energy consumption in 2007, and accounts for about half of all generated electricity. Natural gas consumption is minimal, due to the lack of domestic infrastructure to transport, distribute and utilize the fuel. While urban electrification rates are close to 100 percent, droughts in late 2009, affecting the Paute River hydroelectric plant, caused the government to implement electricity rationing from November 2009 to January 2010.
Exploration and Production
There have also been discussions between Ecuador and Venezuela about the construction of a new refinery in Ecuador. The two countries established a joint company in mid-2008 to build the facility on the Pacific Coast in Manabi province. The planned crude distillation capacity of the refinery is 300,000 bbl/d. Construction is expected to begin in 2010 and startup is scheduled for 2013.