The first of 247 oil wells in Block 43-ITT, one of Ecuador’s major crude oil fields, was ‘deactivated’ this Wednesday as part of the process of closing down this operation that Ecuadorians decided to dismantle in a historic plebiscite held more than a year ago. Ecuador is thus beginning the end of an era based on oil revenues. The slow decline in its crude oil production will accelerate after the closure of this important block.
In this way, the government of Ecuador has initiated the process of closing the wells of the oil block 43-ITT, located in Yasuni National Parka biosphere reserve in the Amazon (east), following a popular consultation in which Ecuadorians decided to leave the oil from this deposit underground. It is estimated that the crude oil reserves of the field could be between 500 million and 1 billion barrels.
The Ministry of Energy and Mines said in a statement that in this way the results of the plebiscite held on August 20, 2023which implies “the early closure and subsequent abandonment of this block”, located in the province of Orellana (northeast). This block could represent more than 10% of all Ecuador’s oil production. This small country produces about 480,000 barrels of crude oil.
According to the U.S. Energy Information Administration, Ecuador has 0.5% of all the world’s oil reserves, making it the fourth largest country in Latin America and the Caribbean, with approximately 8.27 trillion barrels. Ecuador reached its peak production in 2014 with approximately 562,000 barrels per day. However, Ecuador’s oil industry has struggled to maintain production due to aging fields, pipeline disruptions, and environmental concerns.
Comings and goings with OPEC
In addition, Ecuador has been a member of the Organization of the Petroleum Exporting Countries (OPEC) since 1973.although he temporarily left it in 1992, due to the impossibility of meeting the production quotas imposed by the organization, to rejoin the cartel in 2007 under the presidency of Rafael Correa, with the hope of benefiting again from the international coordination of oil production and improving its position in world markets. This return coincided with a new surge in oil prices and a period of economic and political reforms in the country.
However, in 2020, Ecuador has decided to withdraw from OPEC again. This decision was motivated by the need to have greater flexibility to increase production and obtain additional income, in a difficult economic context due to the fall in oil prices and internal financial problems. Leaving OPEC allowed Ecuador to establish its own oil policy without the limitations imposed by the organization.
Although the Constitutional Court ruling that gave the green light to the plebiscite indicated that the decision would be implemented within a year, Ecuador’s Minister of Energy and Mines, Antonio Gonçalves, assured on Wednesday that the government was considering a period of five years and five months so that the closure of the wells and the dismantling of the infrastructure could be carried out in safe conditions for the environment and the surrounding indigenous communities.
Protecting biodiversity
Thus, block 43-ITT, which covers the Ishpingo, Tambococha and Tiputini fields, is located in the Yasuni National Park, one of the Amazonian areas with the highest concentration of biodiversity on the planet and home to indigenous peoples in voluntary isolation such as the Tagaeri, Taromenane and Dugakaeri.
“Complying with the closure of the ITT is not an easy task, it requires special and technical planning,” Gonçalves said during his visit to the block this Wednesday to supervise the closure of the first well. For his part, Diego Guerrero, deputy general director of the Ecuadorian oil company Petroecuador, in charge of operating Block 43-ITT, said that the company’s technicians will work to meet the agreed deadlines.
Ishpingo B-56 oil well
The well closed this Wednesday is the Ishpingo B-56, a directional well, during which the closure and abandonment took place. Subsequently, the electro-submersible equipment and the production pipeline will be extracted, as explained by the Ministry of Energy and Mines in a press release.
Subsequently, the well will be cleaned and cement plugs will be placed for the final abandonment of the structure. With the closure of this well, the production volume of block 43-ITT will be gradually reduced, the ministry warned.
Currently, production from Block 43-ITT, which began operating in 2016, reaches 50,000 barrels of oil per day, a figure that has fallen over the past year, when two months ago it exceeded 58,000 barrels per day.
This makes it the fourth block with the highest production in Ecuador and assumes about 11% of national crude oil productionwhich remains around 487,000 barrels per day, which continues to be one of the main pillars of the Ecuadorian economy.
A historic plebiscite
The vote set a global precedent as Ecuador became the first country to democratically vote to close an oil development in order to preserve Yasuni National Park, one of the most biodiverse areas in the world, home to more than 2,000 species of trees and shrubs204. mammals, 610 birds, 121 reptiles, 150 amphibians and more than 250 fish. Oil reserves are estimated at around $13.8 billion over the next 20 years.
This popular consultation was promoted by the environmental group Yasunidos, who managed to collect 757,000 signatures in favor of the vote, and fought a ten-year legal battle with state institutions until they got the green light to proceed with the vote.
Yasunidos issued a statement on Wednesday accusing the country’s president, Daniel Noboa, of making a mockery of the people by not respecting the constitutional decision that sets a one-year deadline to comply with the popular mandate of the plebiscite.
“They have done absolutely nothing” to comply with the provisions issued by the Constitutional Court that validated the popular consultation of August 2023, the group added, assuring that there is a “flagrant non-compliance” with the declaration of the people, while the exploitation continues. . oil company “to this day”.
“The lack of progress in the progressive and orderly closure” of the oil units “demonstrates that the intention (of the government) has never been to comply with the will of the Ecuadorian people,” Yasunidos insisted in his writing. Likewise, he called the report that warns against the closure of a single well in Block 43-ITT a further “mockery” by the government.
