Ecuador agrees payment plan with Schlumberger

Ecuador has agreed a payment plan with US oil services firm Schlumberger and has also agreed to renegotiate two of the firm’s contracts.

The government has successfully renegotiated a payment plan with the US firm, which is its main creditor, the hydrocarbons ministry said in a press statement. The ministry did not specify the exact amount that was agreed in the payment plan, but Ecuador owes the company approximately US$850 million.

The ministry did say, however, that it had agreed to index two of Schlumberger’s contracts to West Texas Intermediate prices – at the Shushufindi and Libertador fields – in an effort to reflect market conditions better, and to help expand investment.

The Shushufindi consortium, consisting of Schlumberger and Argentina’s Tecpetrol, signed a 15-year enhanced oil recovery (EOR) contract for the Shushufindi-Aguarico field in 2012. 

Schlumberger is also the operator of the Pardaliservices consortium, which includes Tecpetrol, Canada’s Canacol and Sertecpet. In 2012, the companies signed a 15-year contract to stem production decline at the Libertador-Atacapi fields.

The government said that new tariffs would also apply for the two contracts from August 1. 

Tariffs for the Shushufindi field will be lowered from US$29.35 per barrel to US$19.50 per barrel, until 2020, it said.

New investment by Schlumberger totalling around US$1 billion was also agreed as part of renegotiations for the Shushufindi field, the ministry added.

Meanwhile, tariffs will be lowered at the Libertador field from the current level of US$38.54 per barrel to US$25.50 per barrel. The contractor also agreed to invest an additional US$140 million in the field.

“These initiatives are part of steps being taken by the government of Ecuador that are aimed at establishing adequate levels of oil income for the country, while encouraging private investment in the sector,” the ministry said.

Ecuador said in June that it intended to negotiate a payment plan with a number of oilfield services companies to which it owes money, as the country tries to cancel its debts and stimulate its energy sector.

Quito owes more than US$2 billion to services firms. Along with Schlumberger, the government also has debts with US services firm Halliburton and China’s state-owned Sinopec Services, as well as a number of smaller providers. These are believed to include local firm Sertecpet and Colombian companies Montecz and Edinpetrol, all of which have been active in the country recently.

Ecuador’s debts to Schlumberger, which focuses mainly on EOR work in the country, have accumulated over a period of nearly two years.
In March, Schlumberger wrote to the government saying that arrears in excess of US$1 billion were causing it “considerable financial stress” and urged a resolution.

In June, Quito provided Schlumberger with US$150 million in central bank notes that can be used for paying taxes, in a preliminary effort to pay down its debts with the company.