The development of new refining capacity will close a major trade gap and allow Ecuador to produce a new mix of products for the first time.

Ecuador's refineries are long in the tooth to say the least. While renovations are planned to enhance production levels, it is the development of the brand-new Pacific Refinery that will save Ecuador up to $4 billion a year on oil-related imports and allow it to generate a host of new products.

The country currently has three oil refineries, all run by state-owned downstream company Petroecuador, with an overall processing capacity of 175,000 barrels per day (bbl/d). With $4 billion worth of oil-related goods imported every year, however, “the output of these refineries does not suit the country's current needs," Wilson Pástor M., Former Minister of Non-Renewable Natural Resources, told TBY.

The Esmeraldas Refinery, on the northwest coast of the country, is currently Ecuador's largest oil processing installation, pumping out up to 80% of its 110,000 bb/d capacity at present. The refinery is currently in a state of overhaul, shutting down periodically for works aimed at achieving full capacity by 2014. The project is two-legged, including a revamp to afford it greater energy efficiency, at a cost of $750 million, as well as an upgrade using high-quality, low-sulfur content products, at a cost of $600 million.

The other two refineries include La Libertad, with a capacity of 45,000 bbl/d, and Amazonas Shushufindi, which is the smallest of the three, processing 20,000 bbl/d, but expected to increase to 40,000 bbl/d after an $800 million expansion project penned for completion in 2015.

The real news, however, is the greenfield development of the Pacific Refinery, a facility that will have an initial capacity of 200,000 bbl/d, later to be expanded to 300,000 bbl/d in Phase II, which will meet Ecuador's needs and allow it to join the export club. Construction has begun on the $12 billion project, with early estimates suggesting it could come online in 2015, and reach full capacity by 2017. The project has already had a significant impact on Manabí Province, which it calls home, with 25,000 short-term jobs expected to be generated in total.

Petroecuador is the dominant shareholder, with 51%. Venezuela's PDVSA is now the third largest shareholder, after a pre-arranged deal to bring in the China National Petroleum Corporation (CNPC) with a 30% stake. The refinery will have a substantial petrochemical processing capacity, allowing Ecuador to produce high- and low-octane fuels, diesel, lubricants, polypropylene, benzene, xylene, and alcohol, all for the first time.

Following the competition of the Pacific Refinery, as well as upgrade works on the country's other refineries, Ecuador's total refining capacity will reach approximately 500,000 bbl/d, with 45% of that expected to supply the domestic market with transportation fuels and petrochemical feedstock, and the remainder exported.

A significant part of plans to reduce imports, the Pacific Refinery is one of President Correa's largest projects, and will represent a key part of Ecuador's downstream operations. The prospect of a new revenue stream, in terms of refined exports, is also a tantalizing prospect, and is behind the substantial investment made across its refining matrix.