Ecuador may leave OPEC if output cut exemption denied

QUITO / Reuters

Ecuador will ask to withdraw from OPEC for two years if the organization does not approve its request to be exempt from production quotas, the oil minister said. The Andean country, which is facing a huge deficit and funding needs because of low oil prices and a devastating earthquake last year, is planning to present its request for an exemption to output limits at the Organization of the Petroleum Exporting Countries’ meeting next month. “The request to OPEC will be to avoid compliance with the cuts and we’ll make that request in November,” oil minister Carlos Perez told journalists. “The second alternative is to ask for withdrawal for two years from OPEC, but we hope the first option will have traction.”
Another possibility is for Ecuador to leave OPEC permanently, Perez said, but that decision would have to be made by the president. OPEC, plus Russia and nine other producers, are cutting oil output by about 1.8 million barrels per day (bpd) until March 2018 in an attempt to eradicate a supply glut that has weighed on prices. Oil producers are working to build consensus on extending that deal, OPEC’s secretary general said on October 19. Ecuador, OPEC’s smallest member, is seeking support for its exemption request from members including Saudi Arabia and Venezuela.
Ecuador plans to increase crude production by 50,000 barrels per day by 2018, with the addition of
new reserves to be exploited in the Tiputini and Tambococha fields. Ecuador’s financing needs have forced the government of President Lenin Moreno, who took office in May, to resort to international markets, tax reforms and public-sector austerity measures. Ecuador’s oil production stands at 530,000 bpd, including that of state oil company Petroamazonas and private firms.