What factors have contributed to Wayra Energy becoming a successful bidder in Ecuador's recent oil rounds?
Wayra Energy is an Ecuadorian oil company with two main shareholders: a Spanish company listed on the Madrid Stock Exchange and focused on business related to electricity, power generation, telecommunications, infrastructure, and renewal energies; and a Venezuelan company specialized in infrastructure works (civil, mechanical and electrical) and oil and gas operations. In 2017, we decided to participate in the Minor Oilfields Round, the first launched by the current government, led by Petroamazonas. There were tendered service contracts for 15 fields, and Wayra Energy was awarded a service contract for a field named Paka Norte, which is a relatively small project, requiring an investment of less than USD50 million. Our strategy was to test the country through a small project. In the end, that project gave us reason to conduct bigger projects. We successfully started operations in Paka Norte and decided to take part in another round conducted by Petroamazonas called Oil and Gas 2018 Round. We were awarded the development of two new oilfields, Oso and Yuralpa. Because of these two new oilfields, our total investments in Ecuador collectively neared about USD300 million. Currently, we have the highest level of fulfillment of committed activities in the last two rounds, producing nearly 4,000bpd. We expect to reach up to 6,000bpd of production by the end of 2019. On top of that, Wayra Energy has been recording major achievements since its start in Ecuador. We drilled our first well in Yuralpa field within 16 days and our second in just 12, the fastest in the history of the field. We are not an oil service company, but an operator.
How has the government worked to help oil companies invest and operate in the country?
Back in 2017, investment funds were quite reluctant to grant financing for projects in Ecuador; however, the new administration started to take steps to become more attractive for investment. Fortunately, today the situation is different. If you go to a fund in the US, they would be willing to talk to you because of those changes. The main risk previously faced in Ecuador was the capacity to collect payments, because Petroamazonas had a negative record. Older contracts between the country and suppliers did not provide resolution methods in the case of fluctuating oil prices, which led to disputes. Currently, these issues are being solved. In the case of Wayra Energy, the company started producing oil in October 2018, and so far the government is fulfilling all its commitments. International investors around the world are now looking at Ecuador in another way, because the country is taking a new road to keeping the economy healthy.
What are the contractual conditions for Ecuador's Petroamazonas?
In the case of our contracts, matters were eventually resolved at a court in Santiago de Chile. We acknowledge the efforts made by Petroamazonas to improve the conditions in its latest contracts, and they now have a higher level of compliance with international industry standards. Additionally, we and other service providers are in constant communication with Petroamazonas to seek improvements. We are grateful for the government's willingness to work hand-in-hand with the private sector currently.
What upcoming rounds will you bid on in Ecuador?
We are participating in the qualification phase for the bidding process for Sacha field. The field is quite familiar to us, because several of our employees have worked there before. The main risk previously faced by private companies in Ecuador was the capacity to collect payments, because previous administrations had a bad record. Older contracts between the country and suppliers did not provide resolution methods in the case of fluctuating oil prices, which led to disputes. This will require more than USD1 billion in investment, which is significantly higher than our previous investments, so the conditions must be attractive enough.