Ecuador's president says country now producing oil at a loss

Maria Jose Sanchez, Associated Press
President Rafael Correa explained on Tuesday, during a visit to areas threatened by the Cotopaxi volcano, that it costs the OPEC nation $39 to produce a barrel of oil for which it only receives $30.
Copyright 2013, The Associated Press

QUITO, Ecuador (AP) — Ecuadoreans are already contending with a rumbling, ash-spewing volcano and rising living costs because they use the appreciating U.S. dollar as their currency.

Now they've been told that Ecuador's oil — its principal export and a vital source of government funding — costs more to produce than it earns.

President Rafael Correa explained on Tuesday, during a visit to areas threatened by the Cotopaxi volcano, that it costs the OPEC nation $39 to produce a barrel of oil for which it only receives $30.

If crude prices remain below $40 that could mean more budget cuts or higher taxes.

Ecuador produces 538,000 barrels a day and under current circumstances stands to lose up to $3 million a day on them, though the state-owned Petroecuador oil company says it was profitable for the first half of 2015 because oil averaged $47 a barrel.

The country also has fixed-price contracts — the most significant with Petrochina from 2009 and Thailand this year that represent about $7 billion in sales.

Oil sales contribute 13 percent to the national budget, or about $3.1 billion.

Tumbling oil prices this year have already prompted Correa to cut spending by $2.2 billion, Finance Minister Fausto Herrera said last week.

The government hasn't yet specified what programs will be cut. However, Correa did say that "for example some of the substantial improvements in education would be delayed."

Correa has come under criticism for not squirreling away any cash for emergencies but instead spending it on public works and other programs that have helped make the leftist economist popular.

The economic crunch and Correa's response have helped his opponents, who have been organizing street protests against him since June that have in recent weeks flared into violence.

Did You Like this Article? Get All the Energy Industry News Delivered to Your Inbox

Subscribe to an email newsletter today at no cost and receive the latest news and information.

 Subscribe Now


Making DDoS Mitigation Part of Your Incident Response Plan: Critical Steps and Best Practices

Like a new virulent strain of flu, the impact of a distributed denial of service (DDoS) attack is...

The Multi-Tax Challenge of Managing Excise Tax and Sales Tax

To be able to accurately calculate multiple tax types, companies must be prepared to continually ...

Operational Analytics in the Power Industry

Cloud computing, smart grids, and other technologies are changing transmission and distribution. ...

Maximizing Operational Excellence

In a recent survey conducted by PennEnergy Research, 70% of surveyed energy industry professional...

Latest Energy Jobs

View more Job Listings >>

Archived Articles

PennEnergy Articles
2008 | 2009 | 2010 | 2011 | 2012 | 2013

OGJ Articles
2011 | 2012 | 2013

OGFJ Articles
2011 | 2012 | 2013

Power Engineering Articles
2011 | 2012 | 2013

Power Engineering Intl Articles
2011 | 2012 | 2013

Utility Products Articles
2011 | 2012 | 2013

HydroWorld Articles
2011 | 2012 | 2013

COSPP Articles
2011 | 2012 | 2013

ELP Articles
2011 | 2012 | 2013