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Ecuador 2013 | ENERGY | VIP INTERVIEW

TBY talks to Luís García Sánchez, E&P Director & Attorney-in-Fact of Repsol YPF, on the changing landscape of the Ecuadorean oil and gas sector.

What is your general outlook for Ecuador and the oil and gas industry for 2013?

Within the difficult economic context at the international level, in which the EU and US economies are having problems restarting, Latin America represents a positive island. Overall, Latin America is growing faster than its peers as well as representing large consumer markets of its own. In particular, Ecuador offers many opportunities because it has numerous national sectors that have yet to be fully exploited and others that have room for further development. Therefore, the country holds unique economic potential. In terms of its oil and gas sector, I think that Latin America is rapidly developing. The new contracts provided much needed stability to the sector by laying down the foundations for the development of the industry, especially in terms of equipment and infrastructure. At the same time, I think that in 2013 we will see new developments thanks to the tendering processes that took place in 2012, which should be awarded in the second half of 2013. We have to keep in mind that the oil and gas industry is key for the Ecuadorean economy. Therefore, Repsol plays a very important role in the development of the sector, and we are open to further involving ourselves in different fields of the industry.

What are Repsol's current production figures in Ecuador?

At the moment, we produce 45,000 barrels a day, about 5,000 barrels more than expected due to the recent addition of a well in the AMO area in Block 16 of the Amazon region. In the future, we might increase our production figures depending on the declaration of the tendering processes. Such decisions will clearly mark the future developments of the company, and we will focus our business strategy according to those resolutions in the latter part of 2013.

“We do not see any company as a competitor, but as a partner for the development of the industry in Ecuador."

What are some of the main activities Repsol currently implements in terms of social responsibility?

We have been developing a collaboration agreement for the last two decades with the communities that are close to our in-field operations. Overall, I would describe those relationships as perfect and long lasting. We are fully aware of their concerns and needs, and that is why Repsol does everything it can to make sure that we contribute to community development.

How was Repsol's performance in 2012, and what are the company's priorities for the next few years?

We signed a national contract in 2010, which will expire in 2018. Therefore, at the moment our activities are framed in that agreement. We committed ourselves to invest around $300 million, and I have to say that in only two years we have already invested $180 million. However, we are currently holding talks with the government to look into ways to expand our collaboration until 2021 and further invest in our activities around the production area.

How would the entry of new competitors impact the sector?

We do not see any company as a competitor, but as a partner for the development of the industry in Ecuador. Therefore, we would welcome more foreign players in the industry, because we believe that by working together as part of a consortium, Ecuador will further develop in the future.

The sector is expected to grow 5% in 2013. What that would mean for Repsol's activities in the country?

I believe that the development of the sector depends on new fields. Repsol is currently negotiating with the government for exploration rights in one such field. The current field we are exploiting, Block 16, is a very mature field that will naturally decrease in terms of production figures. Therefore, we support the exploration of new fields, and as an internationally recognized company we can provide expertise in many areas.

What are some of the greatest opportunities the oil and gas sector offers to international investors?

For foreign companies aiming to establish operations in Ecuador, the current legal framework provides the best tools to sign business agreements with national companies in order to start operating in the country. Ecuador is a country of opportunities, and in terms of the oil and gas industry, the current potential is within the fields that are being exploited. I have to say that the national companies here in Ecuador are very willing to cooperate with their foreign counterparts as a way to contributing to the transfer of knowledge, expertise, and technology. Business partnerships are always win-win situations for all the parties involved.

Who are the main partners of Repsol in Ecuador?

Currently, Repsol operates in Ecuador's Block 16 and the Tivacuno oil field, and these contracts expire in 2018. We hold a 35% share in the consortium operating the blocks, and we are the operator. Our other partners are China's Tiptop Energy Ltd, a subsidiary of Sinopec, with 20%; Taiwan's Opic, with 31%; and China's Sinochem, with 14%.

Since you took over two years ago, what is your general vision for the development of Repsol in Ecuador?

Ecuador has long been producing around 500,000 barrels a day, and the government has ambitious plans for the sector with the development of the Refinery of the Pacific. This will contribute to decrease the overall number of imports of petroleum-derived products. However, for that to become a reality the country needs to raise production figures by improving currently exploited fields, as well as increase the exploration of new areas. Ecuador definitely holds a huge potential within the oil and gas industry. Repsol is committed to the development of the industry and the country, and we are also ready to take on any new activities in the country. Repsol aims at increasing production figures through new fields and investments.

© The Business Year - February 2013