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Ecuador NATURAL RESOURCES AND ENERGY
The natural resource sector of the Ecuadorian economy
contributed almost 15 percent to the GDP in 1986, with the
petroleum industry providing virtually all of that total. Although
analysts believed that Ecuador had numerous mineral deposits, few
metals had been exploited. Hydroelectric power from several large
dams provided the primary source of energy.
Petroleum and Natural Gas
Petroleum was the single most important element in the
Ecuadorian economy, accounting for over 14 percent of the GDP in
1986, two-thirds of all export revenues in that year, and much of
the foreign investment. In 1987 petroleum and mining together
accounted for only about 8 percent of GDP because of a significant
drop in petroleum production, but estimates for 1988 indicated that
petroleum production had risen, exceeding its 1986 level. Although
Ecuador's level of production in the late 1980s ranked near the
bottom of the thirteen members of OPEC, it exceeded all countries
in Latin America except Mexico and Venezuela.
Petroleum was first discovered in the early 1900s both on and
offshore from Salinas on the Santa Elena Peninsula west of
Guayaquil. More than 100 million barrels of crude petroleum were
removed in six decades of exploitation; by the mid-1980s, however,
Costa production had fallen to less than 1,000 barrels per day
(bd). Old, expensive-to-maintain equipment produced high operating
costs, making continued exploitation uncertain.
The Oriente, however, had long since eclipsed the Costa as the
center of Ecuador's petroleum activity. In the late 1980s, the vast
majority of Ecuador's 1.6 million barrels of proven reserves lay in
the northern part of the Oriente, between the Napo River and the
Colombian border
(see
fig. 11). This area formed part of a rich
oil-bearing region extending from southern Colombia through Ecuador
and northeastern Peru. Indeed, analysts believed that this region
represented one of the richest oil-bearing areas of the Western
Hemisphere.
Although exploration in the Oriente began in the 1920s,
petroleum was not actually found until a consortium formed by the
Texaco Petroleum and Gulf Oil companies discovered several rich
fields near Lago Agrio (now Nueva Loja) in 1967. The success of the
Texaco-Gulf exploration attracted other companies, and over the
next two decades more than fifty new wells began producing
commercial quantities of crude petroleum. Production in 1989 had
risen to over 1.1 billion barrels, over 99 percent from the Oriente
fields (see
table 13, Appendix).
Ecuador built the 503-kilometer Trans-Ecuadorian Pipeline to
carry crude petroleum from the Oriente fields across the Andes to
a new refinery just south of Esmeraldas. Although the pipeline was
designed to carry as much as 400,000 bd, volume averaged just over
300,000 bd in the late 1980s. A landslide caused by a severe
earthquake in March 1987 destroyed forty kilometers of an aboveground section east of Quito. To keep exports from stopping
completely, Ecuador quickly constructed a thirty-eight-kilometer
spur from the Oriente fields to Colombia's pipeline. Oil was then
either exported directly as crude from Colombian ports or taken by
tanker from Colombia to Ecuador's largest refinery at Esmeraldas.
Although this stopgap measure allowed for some petroleum to be
exported, production at the Oriente fields had to be trimmed by
more than half for the five months it took to repair the TransEcuadorian Pipeline.
Unlike many of the larger OPEC countries, Ecuador refined less
than half of the petroleum it produced. Most of the country's
123,000 bd refining capacity was located at two refinery complexes,
one at Esmeraldas and a complex of three refineries at the Santa
Elena oil fields. The Esmeraldas refinery had a 90,000 bd capacity,
whereas the three older Santa Elena refineries had a combined
output of 32,000 bd. Ecuador's newest refinery, completed in 1987
near Nueva Loja in the Oriente fields, had a capacity of 1,000 bd.
Control and ownership of petroleum production and refining was
held by foreign oil companies, the government-owned PETROECUADOR
which replaced the former Ecuadorian State Petroleum Corporation
(Corporación Estatal Petrolera Ecuatoriana--CEPE), or consortia
composed of both. PETROECUADOR assumed complete control of the
Trans-Ecuadorian Pipeline in 1989 and announced it would take over
most other foreign interest in the petroleum industry in the early
1990s.
In addition to abundant supplies of petroleum, observers
estimated that the country had natural gas reserves in the Oriente
and offshore in the Gulf of Guayaquil totalling 400 billion cubic
meters. Reserves in the Oriente were collocated with petroleum
deposits. Producers flared most of the gas associated with
petroleum drilling, using only small amounts as fuel. Distance from
markets made exploitation of the gas uneconomical, although a small
plant to harness the gas as a fuel was completed near Nueva Loja in
the mid-1980s. Reserves in the Gulf of Guayaquil, thought to be
among the largest in Latin America, remained unexploited because of
an uncertain domestic market for natural gas and a legal dispute
between the government and foreign companies over ownership.
Data as of 1989
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