TBY talks to Oswaldo Madrid, General Manager of Petroamazonas EP, on the company’s fundamental role as a prime oil supplier and income generator for the country.
TBY How were your results in 2011?
OSWALDO MADRID Petroamazonas EP supported the Ecuadorean economy by producing 33% of all processed oil, which is the country’s main income. The oil income generated by Petroamazonas EP in 2011 was $4.3 billion, and this is a very important income source for Ecuador. Petroamazonas EP has been growing quickly over recent years. In 2012, we will be the major upstream company in Ecuador, producing over 300,000 barrels per day (bbl/d). This represents 75% of the country’s total oil production.
What were the factors that led to the company’s rapid growth?
In 2006, Petroamazonas EP received the operations of previous private operators that were in charge of blocks in the Oriental Basin in Ecuador. We have been growing because, thanks to our procedures, processes, and business model, the government decided Petroamazonas EP was the best company to take onboard more responsibilities in the upstream oil business in Ecuador. Petroamazonas EP has a very modern business model, giving us great competitive advantages in comparison to other national companies in Ecuador.
Regarding Petroamazonas EP’s operations in mature fields, are there any plans or strategies to advance production recovery?
Most of the regions under Petroamazonas EP are mature fields, and some have been exploited for 70% of the estimated reserves. We are working on enhanced oil recovery (EOR) projects. Currently, it is an internal project for Petroamazonas EP, though we are now thinking of contract possibilities. We have also been working very hard to secure reserves for next year. Petroamazonas EP has pilot projects under development in Block 15, Block 12, and Block 7. We are also working with companies that have experience in EOR projects.
During 2012 you are also preparing to merge with Petroproducción, a part of EP Petroecuador. In what phase of the process are you?
The process is expected to be finalized in 2012. We are aiming to start 2013 with two companies, one upstream and the other one downstream. We are in an accelerated process. Petroamazonas EP already has people working in the exploration and production department of EP Petroecuador, and we are working directly within the company. The idea is to see the merger take no more than eight months. We have started certain control over operations and we are expecting to have total control by mid-2012. Certain aspects should be achieved in the next eight months in order to be in good shape for a final absorption. We will be absorbing only the upstream operations. At the moment, Petroamazonas EP is upstream and EP Petroecuador is upstream and downstream. The idea is to have one company for each sector of the industry.
What will be the lasting impact of the merger?
This is the third merger that we are doing. The first one was with Brenco, from France, which was operating Block 7 and 21; the second one was with Petrobras, which was operating Block 18, and now EP Petroecuador. There will be a lot more jobs available in 2012. Petroamazonas EP has demonstrated that it has a fine business model that can provide the skills required to manage the merger process successfully. The staff at EP Petroecuador will also have a lot more work due to the resulting additional activities. Everything has been planned to the finest detail.
What will the main challenges and advantages be for the merger of these two companies?
The advantages are that we will increase efficiency, share resources, and implement new technologies and modern procedures. Petroamazonas EP has demonstrated that it is a high-standard upstream oil company, not only in Ecuador but also in the region. We are very well known in the UK and other countries. The idea is to have a company that has all the skills and power to confront the new challenges of the future. We are also looking at the possibilities of going abroad with our operations, with Colombia and Peru representing two possible targets.
How has the company developed in general?
All the strengths that we had as a public company in the past have remained, and have even been reinforced. Working as a public company we have to deal with all the regulations, but this is normal and we are now a sturdy company that has grown and improved. We are very proud of how Petroamazonas EP has developed.
© The Business Year