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All of Ecuador’s Exportable Crude Oil in 2018 will be Used to Pay for Oil Pre-sales
Ecuador's "Business Daily" reported on December 17 that the Ecuadorian Ministry of Petroleum recently announced that according to the oil pre-sale agreement reached by the previous government and Chinese and Thai oil companies, all 120 million barrels of crude oil available for export in Ecuador in 2018 will be fully repaid. Pre-sale money. Therefore, Ecuador cannot launch new transactions in the international market at better prices. At present, the Ecuadorian Ministry of Petroleum and the National Petroleum Corporation hope to renegotiate the pre-sale agreement with the Chinese and Thai oil companies.The absence of crude oil that can be freely traded in the international market means that the Ecuadorian government cannot obtain additional funds other than advance sales. At present, the price of crude oil exported from Ecuador is about 55.13 US dollars per barrel, and according to the calculation method stipulated in the pre-sale agreement, Ecuador will lose at least 4-5 US dollars per barrel of crude oil. The Ecuadorian government will need to repay a total of 512 million barrels of pre-sold oil in the future. By 2019, half of Ecuador's exported crude oil will still be unable to be freely sold in the international market. It is expected that the situation will improve until 2024, and 80% of the crude oil can be freely traded.
Oil is an important source of foreign exchange earnings for Ecuador, and it is very important for Ecuador to maintain the "dollarization" of its currency. It is reported that on December 11, the government has set a goal to negotiate with foreign companies in the next 45 days to modify the oil price calculation formula, oil sales volume and transportation costs to strive for more favorable conditions for Ecuador in oil pre-sales.
Ecuador was able to export 200 million barrels of crude oil to the international market in 2018. At this stage, the international market has a large demand for heavy oil, and the crude oil produced by Ecuador falls into this category. If Ecuador considers terminating the pre-sale contract early, it will need to pay at least US$5 billion to foreign oil companies.
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