Ecuador’s President Daniel Noboa’s initiative to rejuvenate the country’s largest oil field is faltering as he races to secure re-election just weeks before a runoff vote.
After reaching an agreement last year to transfer control of Ecuador’s Sacha field to Sinopetrol, a little-known consortium of foreign oil firms, Noboa has encountered increasing backlash regarding his management of the deal. His finance minister, Juan Carlos Vega, resigned over the situation, according to sources who requested anonymity due to the sensitivity of the matter. Additionally, his presidential opponent, socialist candidate Luisa Gonzalez, has pledged to annul the agreement if she wins the runoff on April 13.
The revival of Sacha, which is vital for Ecuador’s struggling economy, relies heavily on foreign investment. However, critics from various political backgrounds have condemned Noboa’s strategy for selecting an operator for the field and have raised doubts about whether the consortium—comprising Amodaimi, a subsidiary of China’s Sinopec, and Petrolia, a division of Canada’s New Stratus Energy Inc.—possesses the necessary funds and expertise to enhance production.
In light of the ongoing controversy, Noboa recently threatened to terminate the contract unless Sinopetrol pays a $1.5 billion entry bonus by March 11, a month earlier than originally agreed. This expedited deadline presents a significant hurdle for the consortium, prompting analysts to suggest that Noboa may be intentionally trying to undermine the deal to bolster his campaign after narrowly defeating Gonzalez by just 15,000 votes in the first election round.
“The damage has already been done, but he’s trying to minimize his losses,” stated Sebastian Hurtado, head of the political risk consultancy Prófitas in Quito. Former Oil Minister Fernando Santos described Noboa’s ultimatum as “a pretext to gracefully conclude the negotiations.”
Noboa’s office did not respond immediately to a request for comment, but the president confirmed the deadline during a recent event.
SOURCE: Bloomberg News