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Ecuador Oil Exports and Domestic Consumption
Sept 15 (Reuters) - Ecuador, South America's No 5 oil exporter, could lose money if oil prices rise above around $80 a barrel because of the country's scant refining capacity, the finance minister said on Thursday.
While oil exporting countries are filling up their coffers with petrodollars thanks to a spike in crude prices near $70 a barrel, Ecuador is on the verge of becoming a net loser from the oil game.
"The equilibrium price of revenues to losses would be $78 to $80 a barrel of oil," Magdalena Barreiro, Minister of Economy told Wall Street investors at the Ecuadorean American Association in New York.
Ecuador exports around 112,000 barrels per day and receives 25 percent of the revenue from private companies that produce around 321,000 barrels per day.
But the Andean nation needs to import oil derivatives such as fuel, as its biggest refinery -- Esmeraldas -- does not have the capacity to supply fuel to a country of 13 million people.
Perversely, the lack of investment in refining forces Ecuador to import fuel, so the country draws little benefit from higher prices for its oil exports.
Higher fuel prices will force Ecuador's state-owned oil company Petroecuador to spend more than triple the amount it had planned to spend importing fuel this year.
Petroecuador will spend $1.54 billion on importing fuel, up from its original estimate of $489 million due to higher prices.
Meanwhile, President Alfredo Palacio said he would not discuss any subsidies on fuel. He has ruled out raising fuel prices because it would hurt the poor, which means the additional cost will have to be borne by the government.
"At this moment it is not viable to talk about fuel subsidies," he told investors.
Fuel will take up 48 percent of Petroecuador's total budget this year. The budget has also been boosted by $1.05 billion to $3.19 billion due to the higher fuel costs.
Ecuador Travel at Septiembre 17, 2005 12:50 PM | Ecuador Travel | Compras y Regalos