The Mineral Industry Of Other Areas Of South America - Ecuador

The petroleum sector continued to dominate Ecuador's economic activity in 1978, accounting for nearly 10% of the gross domestic product (GDP) and 42% of total export earnings. In 1978, a more flexible petroleum export price was adopted which permitted an expansion of foreign market opportunities. During 1979, Ecuador took advantage of disruptions in the world petroleum supply and renegotiated existing export contracts to accomodate the rapidly escalating world market price. Petroleum sales on the spot market were maximized, and prices reached unprecedented levels. By taking royalty payments in-kind, Ecuador increased its volume of petroleum available for term and spot sales. Although the volume remained about the same as in 1978, the total value of 1979 petroleum exports increased to about $920 million, reflecting a 76% increase over the $523 million received for 1978 crude oil exports. Concerned about its steadily decreasing petroleum reserves (recently estimated at about 1.1 billion barrels), rapidly increasing and heavily subsidized domestic consumption, and the prospect of having to import substantial amounts of petroleum by 1983, Ecuador announced plane which it anticipates will double reserves within the next 5 years. The Government plans to spend $1 billion over the 5-year period. Plans include drilling 325 exploration and development wells and establishment of a secondary recovery program for the Sachs and shushufindi fields. Some exploration wells are expected to reach a depth of 17,000 feet. It is thought that substantial reserves exist in the southeast Amazon region. Late in 1979, it was announced that some 10 million hectares will be available for exploration tenders-probably in blocks of about 200,000 hectares each-in the Amazon jungle of the Orients and in the coastal and offshore regions. The Government planned to commission a private, independent analysis of Ecuador's petroleum reserves that would also include recommendations on efficient production levels.