What factors have contributed to Wayra Energy becoming a successful bidder in Ecuador's recent oil rounds?
Wayra Energy is an Ecuadorian operating oil company. The company have two main shareholders, a Spanish company listed in the Madrid stock exchange and focused in business related with 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 round launched by the current Ecuadorean government, leaded by Petroamazonas, the NOC of Ecuador. 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. At 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 in 2018 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 near about USD300 million. Currently, we are the company with the highest level of fulfillment of committed activities of the last two rounds, producing nearly 4,000bpd. We are expecting to reach up to 6,000 bpd of production by the end of the year. 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 well in just 12 days, the faster well drilled in the history of field. We are not an oil service company, but an operator. As such, Wayra Energy is specialized in the management and optimization of projects in oilfields.
How has the Government worked on the easiness of oil companies to 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 on it. Older contracts between the country and suppliers did not provide resolution methods in the case of fluctuating prices in oil, 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 filling all its commitments. International investors worldwide are now looking at Ecuador in another way, because the country is taking a new road to keeping their economy healthy.
How are contractual conditions for Ecuador's Petroamazonas?
Investors first seek to have efficient ways of resolving possible conflicts using international arbitration tribunals being appointed under contractual terms. In the case of our contracts, matters could be 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 that they have now a higher level of compliance with international industry standards. Additionally, Wayra Energy and other service providers are in constant talks with Petroamazonas to seek improvements that could be made in favor of the two parties. One of the recent improvements of Ecuador's government is their willingness to work hand-in-hand with the private sector. Wayra Energy is grateful for that.
What are Wayra Energy's for upcoming bidding rounds in the country?
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 has worked on that field. The main risk previously faced by private companies in Ecuador was the capacity to collect the payments, because previous administrations had a negative record on it. Older contracts between the country and suppliers did not provide resolution methods in the case of fluctuating oil prices, which led to disputes. We are still waiting the final terms and conditions for the process of Sacha field and we will present a formal bid only if the conditions are attractive enough for us. This project will require more than USD1billion in investment, which is significantly higher than our previous investments. Apart from Ecuador, we are looking business opportunities in other regional markets in order to expand our operations, with Mexico and Colombia being our next countries.