Ecuador to sign up new crude field operator
OREANDA-NEWS. Ecuador's state-owned PetroAmazonas is negotiating with five potential new operators to increase crude production at its mature Sacha field, signaling the potential for a limited recovery in drilling activity this year.
Sacha is currently operated by Rio Napo, a 70:30 joint venture between PetroAmazonas and Venezuela's state-owned PdV. Both companies have been pummeled by the collapse in oil prices.
Rio Napo has been operating 72,000 b/d Sacha since 2009, but now Ecuador wants to hire a new operator capable of injecting $2bn to boost output.
Ecuadorean officials told Argus that US Halliburton is the front-runner in the negotiations. Ecuador hopes to sign the contract by April, but is not clear yet what will happen with Rio Napo. Halliburton declined to comment.
"Ecuador is seeking a more efficient operating alternative, fresh investment and new technologies for Sacha," strategic sectors minister Rafael Poveda told Argus.
Quito is still defining a management model, but Rio Napo will not be a part of the new scheme, Poveda added.
The agreement will mirror a 20-year service contract signed on 15 December between PetroAmazonas and oil field services giant Schlumberger to increase production at the 70,000 b/d Auca oil field in the Amazon district.
Schlumberger has pledged to spend $4.9bn over the next two decades to boost Auca production by 20,000 b/d. The company will receive a $26/bl fee for existing and new production.
The oil services firm made an initial $1bn capital outlay, and will spend an additional $2.1bn in the first nine years of the contract, including $1.1bn in 2016-2019, and $1.8bn to cover operating costs at Auca over the life of the contract.
Bringing in a new operator for Sacha will help relieve PetroAmazonas from the financial burden of paying a fee to Rio Napo for running the oil field, a government official close to the negotiations says.
In 2015 PetroAmazonas disbursed some $167.1mn to Rio Napo, equivalent to 13pc of the company's operating expenses, according to official documents seen by Argus.
Quito also hopes a new operator at one of the country's largest fields will reverse a dramatic decline in the number of active drilling rigs not only at PetroAmazonas' acreage but also at blocks run by foreign oil companies.
The number of active rigs hit an historic low of just five in January, down from 25 rigs a year earlier, 39 in the same month of 2014 and a 42 peak in January 2013, according to independent drilling data analyst Jorge Rosas.
Rosas bases his research on statistics from oil regulator ARCH and monthly surveys made with oil and services companies.
Of the five drilling rigs active in January, two were operating at PetroAmazonas' block 31 and Shushufindi oil field respectively; one at Chinese Andes Petroleum's Tarapoa block; one at Chilean Enap?s Inchi field and a fifth at block 54, operated by Singapore-based Orion Energy.
"In December-January drilling hit rock bottom, but I do not think that we will see another significant drop in the number of drilling rigs in 2016," Rosas told Argus.
The rig count is starting to recover. By February it rose to seven and, as Schlumberger has started operations at Auca, the rig count will continue to grow, Rosas says.
If PetroAmazonas reaches an agreement for Sacha by April, the new operator could bring in more rigs. In the best scenario, Rosas says, "there will be at least 10 rigs operating in Ecuador by the end of April and a monthly average of 8-10 rigs for the rest of the year."
Drilling activity is also picking up as PetroAmazonas reaches agreements in a negotiations launched in October to trim the fees for enhanced recovery operations at its mature fields.
By the end of 2015 some contractors had halted activities temporarily while talks were underway. PetroAmazonas did not specify which services contracts or activities were suspended.
Companies working on such EOR programs for PetroAmazonas include Schlumberger, Halliburton, China's Sinopec Services, Argentina's Tecpetrol, Canada's Canacol and Ecuador's Sertecpet.