Proposals for Ecuador's new pipeline to be presented this month

Jul 19, 2000 02:00 AM

Foreign companies wishing to construct Ecuador's new heavy crude pipeline (OCP) must formally present their proposals to the government by Aug. 19, said President Gustavo Noboa. Noboa made the statement after signing a decree outlining the regulations for the contract allocation process for the construction of pipelines in Ecuador.
The regulations, with will be issued to the press, were compiled by the special advisory commission for the construction of the OCP. The regulations are seen as a crucial step toward the construction of the new pipeline, which has been stalled for some eight years.
"The most important aspect of these regulations is that they start up private investment in activities related to the transport of hydrocarbons," said Noboa during his speech. The OCP is the largest proposed construction plan in Ecuador at present.
The pipeline would have a transport capacity of 300,000 bpd with a possible extension capacity to 350,000 bpd. The president stressed that the pipeline must be built by the private sector.
"This investment will be at the cost and risk of (the company) proposing to build the pipeline," he said. "The company will construct and operate the pipeline, and after a period necessary to recover its investment, it will give it back to the state." Interested companies now have 30 days to present their proposals to the commission. This time period will allow for transparency and provide time for all contenders to make their offers, the president indicated.

To date a $ 700 mm offer has been received from a private consortium made up of Kerr-McGee, Occidental Petroleum Corporation, Repsol-YPF, Agip Oil and Alberta Energy. Another $ 470 mm offer has been submitted from Brazilian companies Petrobras and Andrade Gutierrez.
The private consortium however is the only group that has made an offer to build the OCP at no cost or risk to the state. Many analysts view this pipeline as key to the recovery of the country's ailing economy.
The Trans-Ecuadorian Pipeline (SOTE) extension has been completed and will be inaugurated, said Noboa. The SOTE now transports 390,000 bpd. Petroecuador, the Atlantic-Richfield Company (ARCO), and YPF have financed the $ 50 mm extension project that aims to increase transport capacity via new pumping stations. The SOTE used to transport approximately 325,000 bpd.
The SOTE, build in 1972, stretches 500 km from Lago Agrio in the Amazon region to the province of Esmeraldas on the northern coast of the country. Ecuador also transports 45,000 bpd via the Colombian Trans-Andean Pipeline (OTA).

Source: Bridge News via Newspage
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