DIEGO DÍAZ

Ecuador 2020 | HYDROCARBONS | INTERVIEW

Investing nearly USD500 million in its Ecuadorian assets led to a healthy diversification of ENAP's business portfolio abroad.

Diego Díaz
BIOGRAPHY

Diego Díaz obtained a degree in economics from the Catholic University of Ecuador and an MBA from Notre Dame. He has received complementary training in the Americas, Europe, and the Middle East in senior management, economics, finance, and oil related studies. He has almost two decades of management experience with ENAP in Ecuador and Egypt, Occidental Petroleum in Oman, and the Central Bank of Ecuador, entities in which he has successfully led high performance multidisciplinary teams in the areas of new business, drilling, facilities, planning, finance, IT, supplies, and investments. In his role at the forefront of ENAP, he has led important sustainability, efficiency, and productivity initiatives.

ENAP is the main energy company in Chile. How has it benefited from its domestic experience to pursue business opportunities abroad?

In 1945, oil was discovered in Chile, and shortly thereafter the government created ENAP as a vessel to develop its reserves, in time extending its operations into the downstream and energy sectors. In 2018, ENAP went through an important transformation with a new corporate governance policy that promotes and encourages best practices to the highest standards as a state-owned company. ENAP is run by a board chaired by the government of Chile that oversees the execution of a long-term master business plan that has as its main objectives not only turning the company into a more efficient entity, but also boosting productivity. As a result, we are implementing a cost reduction plan that will help reduce the company's debt via different strategies that include strengthening current synergies and creating new ones among different divisions and with contractors and other players. ENAP currently operates in three segments: refining and commercialization (ENAP imports about 200,000bopd for its refineries, and an important portion of that is produced in Ecuador); gas and energy, which also includes geothermic energy generation; and exploration and production, which includes the company's businesses in Chile, Ecuador, Egypt, and Argentina. ENAP's decades-long experience led to the creation of an international branch of ENAP in the 1990s that set out with the specific purpose of seeking business opportunities abroad. Thus, ENAP entered the Ecuadorian market in 1992 as a non-operating partner in an oil production consortium. The performance of this market allowed ENAP to push its interests in Ecuador forward, and in 2003 the Ecuadorian branch of ENAP was awarded two contracts to operate several oilfields directly for the state-owned oil company. In 2010, those contracts were renegotiated directly with the government, and the new terms and conditions included significant extensions of the contract terms.

What are the highlights of ENAP's exploration and production activities in Ecuador?

We have been extremely successful as operators. Our two main oil production contracts, of which we are the sole proprietors and operators (blocks 46-MDC and 47-PBHI), have seen steady increases in production output, moving from 6,000bpd in 2006 to more than 23,000bpd today. We have invested nearly USD500 million in these oil assets, which has led to a healthy diversification of ENAP's business portfolio abroad. It is worth mentioning that our operations in Ecuador are certified carbon-neutral, and we are the only oil company in Ecuador to achieve this. We have a great relationship with the government, not only because of our clean, efficient, safe and sustainable operations, but also at the negotiation table. Our consistent value proposal has allowed us to execute some 15 agreements with the state, all of which have been performed to the great satisfaction of both parties. We have not experienced any conflicts or sudden regulatory changes that could jeopardize our business operations or investments, or that could otherwise make the situation unbearable.

What are your plans and strategies to strengthen your presence in Ecuador in 2020?

Today our focus is set on three main drivers: sustainability, productivity, and responsibility. Sustainability is paramount because it provides the bedrock that will sustain our long-term growth. In this sense, we are directed to only selecting business opportunities that add value to our host country and to ENAP. Any and all business opportunities must be proven successful to a degree that satisfies our strict strategic decision-making filter. As for productivity, we are undergoing an innovation process that will allow us to become even more productive.