MercoPress. South Atlantic News Agency

Ecuador decrees oil production under 'force majeure'

The measure allows Ecuador to temporarily suspend operations in its oil fields,

The Government of Ecuador has declared a situation of force majeure for the country's oil sector due to the effects of erosion in the Coca River, one of the tributaries of the Amazon basin.

The authorities have issued a resolution Sunday “for oil companies that maintain contracts under the modality of rendering services in the country,” following the stalling of crude oil transport through the country's main pipelines: the Trans-Ecuadorian Pipeline System (SOTE), the Heavy Crude Oil Pipeline (OCP), as well as derivatives in the Shushufindi Quito multi-pipeline.

Force majeure is a clause established in oil contracts which allows suspending certain commitments when unforeseeable circumstances occur and may obstruct or delay the obligations contracted, such as a natural phenomenon that puts the oil infrastructure at risk.

The measure allows Ecuador to temporarily suspend operations in its oil fields, according to storage possibilities, and thereby avoid claims from the international market.

In its statement, the Energy Ministry said that “the National Government, through EP Petroecuador, guarantees the normal delivery of gasoline, diesel, jet fuel, electric fuel oil and LPG for domestic use,” while contingency plans were set in place “to minimize the impact of the situation, throughout the hydrocarbon chain: exploration, production, refining and industrialization, transport and storage, and internal and external marketing of hydrocarbons and their derivatives.”

Among these measures, the note specifies, emerging variants are built that allow the pumping of crude to resume. This is the third time the Ecuadorian Executive has declared force majeure due to erosion in the Coca River. The first took place in April 2020 after a landslide that broke several oil pipes in the area, followed by such declaration in July after landslides of the river walls.

Regarding the current situation, authorities said they were evaluating emerging variants in order to resume pumping crude.