FIELD TRIP

Ecuador 2013 | ENERGY & MINING | INTERVIEW

TBY talks to Oswaldo Madrid B., General Manager of Petroamazonas EP, on investments in 2013, neighboring countries, and developing the sector for the future.

Oswaldo Madrid
BIOGRAPHY
Prior to joining Petroamazonas EP in April 2010, Oswaldo Madrid was the Superintendent of Construction and Facilities at the Temporary Administrative Unit of Block 15 from 2006-2008. He has also served as Project Manager for Urazul SA from 1992 to 2004. He graduated from University of San Francisco with a specialization in project management in July 2008. He has been Construction Superintendent of the Occidental Exploration and Production Company since 2004 and is currently General Manager at Petroamazonas EP.

How has Petroamazonas EP contributed to the success story of Ecuador?

Petroamazonas has been exponentially growing since it was established in 2006. We have gone from producing 88,000 barrels per day (bbl/d) to around 320,000 bbl/d at the moment. In 2013, we expect to close the year with 325,000 bbl/d. After several business agreements, our company currently manages 65% of the overall oil production in Ecuador, and we are the main company managing Ecuador's oil strategy. We have to keep in mind that about 30% of the country's budget comes from oil production, which means that we are a key player in the national economy, and, therefore, we play a vital role in the development of the country.

What is your expected investment for 2013?

We have a $3.2 billion investment budget for 2013; this is very indicative of the level of investment we dedicate every year to consolidate and increase oil production in Ecuador. Part of the budget is designated to explore new potential oil fields that will enable Ecuador to increase its oil reserves. At the same time, we will conduct more perforation and facilities installation work in 2013 in order to keep up the oil production figures of recent years. In other respects, we have operative expenses of around $1.2 billion.

How many fields does the company currently operate?

We have 13 oil fields in eastern Ecuador, plus three other fields on the coast as well as natural gas operations in the Amistad field, in the Gulf of Guayaquil.

What roles does Petroamazonas play in the development of the Pacific Refinery project, and what will be the impact of the project in the industry?

The main activity of Petroamazonas is exploration and production work in oil fields, and, therefore, we expect to become the main supplier of the new refinery plant. In this context, the main future developments are focused on opening potential oil fields in mid-2013. We have been working very hard to put together a very ambitious team with other investors in order to present attractive and ambitious proposals for the Southeastern blocks to the Hydrocarbons Secretary. Petroamazonas definitely thinks it can play a key role in the future development of the industry in the country. We foresee these processes as very relevant for the company's activity and the expansion of our business presence in the industry.

What role can neighboring countries play in Petroamazonas' future growth strategy?

We are a relatively young company and, therefore, our focus has been on consolidating our presence in Ecuador. In fact, this has been a period of large and sustainable growth, which made us pay special attention to our business structure. However, we have already approached some neighboring oil companies in the region, as it is the next natural step in our growth, and we have held positive conversations with companies such as Ecopetrol, Petroperu, and Enap, among others. We believe that we will become stronger as we start consolidating formal and business partnerships with other oil companies, both public and private, in other countries. We think that in the short to medium term we could enter foreign markets.

What challenges does the oil industry face in Ecuador to maintaining its development?

In our opinion, there are several challenges facing our operations and the industry in the country. These include maintaining sustainable oil production levels in existent fields, optimizing resources and production levels in Ecuador, performing enhanced oil recovery works in mature fields using the most up-to-date technology, and strengthening exploration works. This would enable Petroamazonas to expand its operations and the country to increase its oil reserves. We have been a pioneering company in terms of applying new technologies in the sector and we will continue doing so. Also, another challenge for the company is its internationalization over the medium term, which is something we are already working on. Today, our company is already internationally recognized, and we want to expand our presence abroad.

How would you assess the future development of the oil industry in Ecuador?

The oil industry plays a very important role in the national economy and will keep doing so in the near future. However, the government is increasing its efforts to diversify the economy by boosting industrial activity and promoting a change in the energy matrix. I believe the national economic panorama will gradually change in Ecuador; however, the oil industry will continue to play a key role overall. In this context, we will see a further technology advance in the industry and the national economy.

What is the size of your workforce at the moment?

In December 2012, we had 1,500 employees; however, once we finally took over Petroproducción's activity, we increased that figure to around 5,000 people. Overall, I believe we are one of the largest employers in the country.

Is it easy to find a qualified workforce for the industry in Ecuador?

It is hard to find a technical and qualified work force for the industry not only in Ecuador, but worldwide. The current demand for qualified workers at the international level is very high, and Ecuador is no exception in this context. We are working on training new, young professionals to face the future of the industry.

How does Petroamazonas engage with local communities in the regions where it operates?

Since our first day of operations, we have implemented social and community programs with local communities that are directly related to the areas where we operate. These programs offer support to local communities from different perspectives such as health, education, economic, and social welfare. In this context, we have to praise the government's effort, which is dedicating 12% of the industry surplus to the development of local communities.

Could you describe your business relationship with Petroecuador?

In 2011, we started a process of upgrading the systems and processes of the national oil companies. That initiative led to an in-depth report on both companies, which concluded that it would be better for one company to focus its activities on the upstream segment, and the other one on the downstream. Petroamazonas was named the company with the highest levels of technology in its systems and processes of infrastructure, as well as the enterprise with the most integrated and stable management system in order to take over Petroecuador's upstream activities. Overall, we have absorbed the business activities of four public companies already. So far, we have been in charge of Petroecuador's activities for several months, and we are pleased with the results. However, there is still a lot of work to do.

What steps should the government take for the further development of the energy industry in Ecuador?

Petroamazonas only executes oil policies adopted by the government, and we do not take part in the decision-making process. In this context, we follow the guidelines drawn up by the government, which aims at repowering the oil and energy industry so it can be the basis on which the country sustains its diversification and development in all sectors. I believe that is the right decision and the government has intelligently proven that it knows how to manage the economic resources of our industry.