Ecuador to reroute oil flows after pipeline shut

By Alonso Sota

QUITO (Reuters) - A landslide halted shipments on Ecuador's main oil export pipeline on Thursday, but the state oil firm said it would be able to reroute supplies by tapping a private pipeline to avoid defaulting on deliveries.

News of the disruption to an estimated 360,000 barrels per day (bpd) of supply briefly sent oil to a record high above $103 a barrel, but prices later gave up gains after Petroecuador quickly reversed its decision to declare force majeure on exports.

"We changed our decision and we are not going to call force majeure," Petroecuador President Fernando Zurita told Reuters less than half an hour after he had said the company would do so.

"We are going to do a bypass or use the private pipeline to transport the crude."

Zurita said company technicians have not yet reached the affected area, and could not measure the damage to the line or how long it will take to repair following Thursday's landslide.

The SOTE pipeline, which has a capacity of up to 400,000 bpd, is the country's main conduit for pumping crude from the Amazon jungle to ports on the Pacific Ocean.

A senior company official told Reuters that the line had been routinely carrying about 360,000 bpd, some of which is crude produced by private companies but shipped by Petroecuador as part of their participation contracts. That's equivalent to about 0.4 percent of global crude oil supply.

However a second pipeline, the privately-owned OCP, runs a similar route and routinely carries only about 150,000 bpd of crude, less than half its 400,000 bpd capacity.