MercoPress. South Atlantic News Agency

To comply with OPEC, Ecuador cuts private oil output

The Ecuadorian government has decided to suspend oil production by Italy's Agip and France's Perenco, both of which operate in the Amazon region, to comply with new OPEC cuts.

The two firms produce a combined 31,000 barrels per day of crude, which is less than the 44,000 bpd cut for Ecuador mandated by OPEC, of which Ecuador is a member. The Mines and Petroleum Ministry of Ecuador is to take until next week to determine what further cuts will be made to comply with OPEC's decision. A Ministry spokesman said the administration of President Rafael Correa decided to cut output by Agip, which produces some 24,000 bpd of Ecuadorian crude, and Perenco, which pumps some 7,000 bpd. OPEC last December 17 agreed to cut joint production by 2.2 million barrels in an attempt to stabilize international crude prices, which have plunged from 140 USD a barrel last July to less that 40 USD this week. In a television interview Mines and Petroleum Minister Derlis Palacios said that because of the sharp price drop, it is more costly for the country to develop several oil fields than it is to suspend production on them. In one of his end of the year messages President Correa said his government would order a reduction in output by foreign companies to comply with the production cuts agreed to by OPEC. "It's not that Petroecuador has to reduce (production), but also the private companies, where we're even losing" money, Correa said, after noting that the government's contract with Agip – belonging to Italy's Eni - has resulted in losses for Ecuador. "With that contract we're losing money, we're paying more than what we're receiving," Correa said, adding that he had already ordered "all of Agip's production" to be suspended. Oil is Ecuador's main export, 500,000 bpd of which state-owned Petroecuador accounts for about 40%. Revenue from oil exports finances roughly 35 percent of Ecuador's public spending.