China's CNPC wins first oil drilling contract at Ecuador's Ishpingo field -energy minister

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A woman walks past the China National Petroleum Corporation (CNPC) booth during the 2021 China International Fair for Trade in Services (CIFTIS) in Beijing, China September 4, 2021. REUTERS/Florence Lo

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  • Ishpingo's drilling campaign to include 40 wells in 18 months
  • Negotiations over contract migrations to begin in coming weeks
  • Government in talks with China to revamp oil-for-debt contracts

HOUSTON, Feb 23 (Reuters) - The first contract for drilling at the key Ishpingo oilfield near Ecuador's Yasuni National Park has been awarded to China National Petroleum Corp (CNPC), energy minister Juan Carlos Bermeo told Reuters on Wednesday.

Following the approval of a new hydrocarbon law and legislation, Ecuador plans to move forward with auctions and competitive processes for securing much-needed foreign and domestic capital for oil and gas exploration, production, transportation and refining projects.

The South American country, which this week submitted legal reforms to congress offering tax and job incentives for winning investment, has received interest from companies to migrate existing oil service contracts to profit sharing agreements. It plans to begin negotiations on those in the coming weeks, the minister said in an interview.

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"We have a lot of hope on the Ishpingo field," Bermeo said of the CNPC contract.

The first drilling campaign to start after an environmental license was granted for the sensitive area, will involve 40 wells over the next 18 months. It will focus on the field's allowed zone, without touching an area protected by a court ruling that has prevented extending drilling.

Ishpingo is the latest part of the promising ITT-43 oilfield in Ecuador's Amazonia region to start drilling after Tambococha and Tiputini. It is expected to produce heavy oil, which will be added to the nation's output of flagship Napo crude, Bermeo said.

RAMPING UP

Ecuador plans to continue exporting much of its crude through open-market tenders. More volumes could be offered if government talks with China over unlinking crude deliveries from pending debt payments succeed, the minister said.

Ecuador has a goal of producing 580,000 barrels of crude and natural gas this year, up from 477,300 boepd in 2021, when a force majeure declaration due to pipeline issues hit output.

If the government, which plans to fight the extension prohibition in Ishpingo, can grant access to the protected zone, up to seven onshore production platforms could be installed and add 150,000 bpd to future production, Bermeo added.

A $200 million project to relocate the nation's most important oil pipelines, which have suffered frequent interruptions, is also in the portfolio, waiting for budget allocation by state company Petroecuador, Bermeo said.

The country also is searching for a company to share the operation of its 110,000-barrel-per-day Esmeraldas refinery, a process that will be officially launched in April.

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Reporting by Marianna Parraga in Houston, additional reporting by Alexandra Valencia in Quito; Editing by Kirsten Donovan and Diane Craft

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