October 19, 2012 / 8:46 PM / 5 years ago

Ecuador upbeat on oil blocks auction, sees $1 bln in investment

* Three blocks reserved for state-run Petroamazonas

* Exploration rights for 13 blocks will be auctioned

By Eduardo Garcia

QUITO, Oct 19 (Reuters) - Ecuador is upbeat that it will attract investments worth around $1 billion in oil exploration projects from state-run and private companies for some 16 blocks, most of which will be offered in auction, Oil Minister Wilson Pastor said on Friday.

Ecuador, an OPEC-member whose oil output has hovered around 500,000 barrels per day in the past few years, has put aside three blocks for state-run oil company Petroamazonas, which could decide to team up with other state companies to explore the areas.

Pastor said exploration rights for 13 other blocks would be put up for auction on Nov. 28. Companies will have six months to present their bids, and contracts should be signed before the end of September 2013.

“We’re hoping for an investment of around $1 billion or $1.2 billion for this auction, including of course the blocks for state-run companies,” Pastor told reporters.

“I don’t think we’ll get interesting offers for the 13 blocks. ... It’s very likely that only eight will receive offers.”

The blocks are in southeastern provinces, near the border with Peru, far from the northern Amazon regions where most of Ecuador’s crude is extracted.

Pastor said preliminary studies show there are between 400 million and 1.6 billion barrels of crude oil reserves in the area where the blocks are. The government may decide to put four more blocks in the area up for auction in the future.

He said all major oil investors in the country have shown interest in the bidding process, including Spain’s Repsol ; Agip, the local subsidiary of Italy’s ENI ; and Andes Petroleum, which is controlled by China’s CNPC and SINOPEC; as well as European and Canadian companies.

There are 12 state-run companies interested in either bidding for the blocks or teaming up with Petroamazonas, Pastor said. They include Peru’s Petroperu, Colombia’s Ecopetrol and Mexico’s Pemex.

Ecuador signed a deal in August that would let oil companies transport crude from the unexplored but potentially oil-rich area through a pipeline in Peru.

The deal could make the bidding round more attractive to foreign investors because it implies they would be able to send their crude to Peru’s Pacific coast for export.

Ecuadorean President Rafael Correa has had a tumultuous relationship with foreign investors since taking office in 2007.

In a bid to increase state revenue from the key oil sector, the leftist president asked oil companies to sign less-profitable service contracts in 2010, or leave the country. Since then, Ecuador has not attracted any investments in oil exploration projects.

Pastor said oil companies that win the auction would also have to sign service contracts, but the deals would be different from the ones signed in 2010, so that companies can recover the investments they make in exploration. (Reporting by Eduardo Garcia; Editing by Leslie Adler)

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