Declares the essential case of Ecuador in all oil contracts | Oil and Gas News

The clause requires the removal of liability for non-performance of contracts in the event of a disaster.

He declared Ecuador an essential case in all oil contracts, including exports and imports, as the threat of soil erosion forced the closure of two pipelines in the country that transport crude across the Andes.

A clause calling for the removal of liability for non-compliance in the event of a disaster went into effect on Sunday, according to a statement on the Petroecuador state oil producer’s website. The country’s Ecuadorian pipeline system and heavy crude pipeline, as well as the Shushufindi-Quito oil pipeline, had to be shut down.

Ecuador’s third-largest oil contract has hit President Ando Guillermo Lasso since the two Andean pipelines were broken last year, with the goal of stopping production at more than a million barrels a day from more than double the production of a former OPEC member.

River erosion in pipeline infrastructure has accelerated since the Coca-Codo Sinclair hydroelectric plant was inaugurated in late 2016. In April 2020, a landslide cut two crude pipes, causing spills and temporarily reducing production by almost 60%.

International agencies, including the U.S. Army Corps of Engineers, are working to help find a solution to slow down the damage from aggressive wear and tear.

Petroecuador has begun shutting down production in several areas because oil cannot be transported and has limited storage space. The company owns a pipeline across Ecuador, known as SOTE, and the other line, known as OCP, belongs to a consortium of oil companies.

Emergency bypasses are being built to restart oil pumping. Petroecuador currently has enough fuel stocks to supply the domestic market, the statement said.

On December 9, the country’s crude production was 482,000 barrels per day, according to oil and mining regulators. Ecuador exported 345,000 gross barrels per day in October, and imported about 112,000 a day, according to the latest data available from the central bank.

The country imported about 110,000 barrels of gasoline and diesel in November, 66% of which came from the U.S., according to estimates by oil analysis firm Vortexa.

Petroecuador was due to be awarded a temporary tender on Monday to buy 11 diesels for delivery from December.