Statement Ministry of Energy and Mines
In light of the announcement of an alleged conflict between the Ecuadorian state and the NEW STRATUS-PETROLIA company, the Ministry of Energy and Mines states the following:
In 2020, New Stratus attempted to acquire Repsol’s rights to blocks 16 and 67 in the Amazon of Ecuador, accounting for a third of that as there are other companies that make up the consortium that owns the block. In accordance with the law, This transaction had to be approved by the Department of Energy and Mines. To do this, the Authority had to ensure that the assignee, New Stratus, met the requirements of Article 2 of the Hydrocarbons Act, ie demonstrated proven experience and technical and financial solvency.
The company has not demonstrated these requirements, the ministry said Official letter no. MERNNR-MERNNR-2020-1162-OF of December 1, 2020, refused such authorization to acquire Repsol’s assets from New Stratus.
The company insisted again in 2021 on obtaining this approval, a process that is still ongoing as, despite the requests of this authority, it still has not provided any documentation demonstrating its experience and solvency to manage these blocks.
In fact, however, New Stratus – Petrolia Ecuador SA operated Blocks 16 and 67 and received a hefty service fee per barrel produced.
The contract period for blocks 16 and 67 ends on December 31, 2022. According to the law, at the end of the contract period, the area with all its facilities must revert to the state free of charge.
Although New Stratus had not yet completed the process of obtaining the ministerial agreement that would legally allow ownership of the blocks, New Stratus requested that a commission be set up to negotiate a possible contract extension. Neither the law nor its clauses oblige the state to appoint such a commission.
Extending the term of an oil contract is an act of sovereignty of the state, which occurs whenever it suits its interests and is therefore at the discretion of the agency.
In discussions with New Stratus-Petrolia Ecuador SA, it was informed of the state’s decision to exercise its right to revoke these blocks at the end of the contract term and the intention to offer them again for private procurement, but until then one open and transparent tender where the best bid wins.
New Stratus responded negatively to this friendly invitation from the state, insisting that the blocks be delivered to them in a non-competitive system, which is illegal and unethical.
The Ecuadorian state reiterates its invitation to foreign investment. To reputable and solvent companies collaborating within the law and in good faith in their desire to increase oil production.
He regrets the misunderstanding with New Stratus and trusts that it will be resolved through dialogue, but makes it absolutely clear that the company’s claim is entirely unfounded and invalid, as a mere expectation of a contract extension being deemed acquired right is incorrect and further, any renewal must be requested and granted to whoever is the rightful owner of the rights to the lock.
The Energy Portfolio maintains the commitment to establish dialogue mechanisms that allow reaching consensus and decisions that benefit the country and lead to optimal development of hydrocarbon resources.