Shell’s Petroecuador Oil Sales in Limbo Following Pipeline Spill

As it battles to contain a spill from a broken pipeline, Ecuador’s state oil company Petroecuador warned that it might not be able to fulfill contractual obligations to export crude.

According to internal documents obtained by Bloomberg, Shell Plc, which had bought at least 1.8 million barrels of heavy sour Oriente crude loading this month, is projected to suffer a decrease in exports as a result of the force majeure that was announced on Saturday. A message asking for comment was not immediately answered by London-based Shell.

Ecuador has suffered from severe rains and mudslides that ruptured the 360,000-barrel-a-day SOTE pipeline, the country’s second-largest oil conduit, in the province of Esmeraldas. An undetermined amount of oil reached a river system and spilled 65 kilometers (40 miles) to the Pacific Ocean, close to oil-exporting facilities, while the pipeline was closed on Thursday.

Due to declining domestic output and competition from Canadian oil supplied by the new Trans Mountain pipeline, US imports of Ecuadorian crude fell to a 22-year low last year. Most Ecuadorian exports are going to Asia.

Follow-up inquiries about the specifics of the force majeure were not immediately answered by Petroecuador. The corporation based in Quito might have access to supplies stored in the 3.2 million barrel storage tanks at the Balao terminal.

EntekHub.com

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