What is the primary expertise that Belorusneft brings to the market, and how did your operations in Ecuador advance?
Belorusneft is a state-owned company based in Belarus with a history that dates back to the Soviet Union. Already at that time, our expertise and experience in seismic exploration were globally renowned. Internationally, we have mostly been active in Africa and Asia. In Latin America, we started working on seismic projects in 2006, starting in Venezuela where we operate under a joint venture. When the economic crisis started in Venezuela, we started exploring other opportunities in the region and expanded to the Ecuadorian market in 2012. While starting operations here, we realized our equipment, experience, and technologies were pretty advanced, which meant we could be tremendously competitive. In the beginning, we primarily worked with Petroamazonas, although it has largely suspended its seismic exploration activities. Our primary project is in the Armadillo field, which is developing well. Thus far, we have done a number geological studies, modeling, simulation, and reinterpretation of seismic data. We drilled five oil wells in the first phase, and the second phase, which we are commencing soon, includes seven new wells. Importantly, we see possibilities of the increase in reserves for this oil field. Due to the geological studies that we conducted, we found a new oil pool in these oil fields; our expertise allowed us to increase the country's reserves, making this project even more profitable.
How is the collaboration with the Ecuadorian state-owned petroleum firms?
For its oil industry, Ecuador offers to investors mostly service-type contracts, which is a quite unique approach, as most foreign investors are used to production sharing agreement (PSA)-type contracts. Also, service contracts make it more difficult for investors to obtain financing. There have been significant improvements made to the investment climate, but the country could become more dynamic. From our perspective, it is not about regulations and legislations, but about the legal stability and strict enforcement of regulations and legislations. Amidst the crisis, unfortunately most of Petroamazonas' obligations were not fulfilled, making it difficult for international companies to invest again; however, we have seen some improvements in the recent dialog with the government. Our activities in Ecuador will mainly depend on how our dialog continues and what type of agreements we will sign with the other parties. Oil prices have been recovering, which should improve the volume of investment in the petroleum sector, but Ecuador has been relatively slow in exiting from the crisis. Not having its own currency is another reason for Ecuador's slow economic recovery. This process is only beginning, and the economic recovery will largely depend on the government's approach to the investment stability. In order to prosper, Ecuador has to open dialog with the private sector and focus on improving relations with companies that are already in Ecuador because these companies have a great deal of potential to increase investments in the country.
How important is continuous innovation in your industry?
Our company has approximately 25,000 people working around the globe, including an R&D institute in Belarus with a staff of 1,500. We employ this institute to solve different situations and problems, including those we come across in Ecuador. The country has huge opportunities to improve its oil industry with all the technologies that are available. Seismic exploration, for example, has not been done in many regions of Ecuador yet. At present, the ball is with the Ecuadorian government, and we are awaiting its investment decisions and fulfillment of undertaken obligations. 2019 will be a key year, and the company will be able to take several strategic decisions, including the possibility of increasing its investments for its operations in Ecuador by mid-2019. Similarly, many other international companies such as Schlumberger, Halliburton, and Sinopec are waiting to take key decisions regarding future investments in Ecuador.