The oil and gas midstream market in Ecuador is expected to grow at a CAGR of more than 1.03% during the forecast period of 2020 – 2025. Factors such as increasing demand for natural gas and oil and increasing production of oil in the country are expected to boost the demand for the Ecuador oil and gas midstream market during the forecast period. However, the increase in renewable energy deployment and the volatility of crude oil prices has offset investors from making large investments into the oil and gas midstream industry.

  • The transportation industry prospects in Ecuador seem quite optimistic because of the increase in the production levels of the oil in the country in the 2015 – 2018 period and an increase in export through pipelines to countries like Chile, Peru, and others.
  • New pipelines are likely to be used to connect the countries like Chile, Peru, China for the transportation of crude oil. Hence, this is expected to act as an opportunity for midstream companies in the country.
  • The liberalization of the oil and gas market is expected to drive the new investment for the upstream oil and gas projects. Therefore, driving the midstream market in the country.



Key Market Trends

Transportation Sector to Witness Growth

  • Ecuador exported 10,609.923 b/d of crude oil in 2018. Crude oil is Ecuador’s top export commodity, accounting for about 33% of Ecuador’s export revenue in 2018. Ecuador was the third-largest source of foreign oil for the United States, Canada, etc.
  • The government is encouraging the exploration & production activity in new blocks. On September 2018, the government presented 7 new blocks for exploration and production activity in the Sucumbios province for bidding.
  • The projects were awarded to Petrozamora S.A., Grand Tierra Energy LLC, and Frontera-Geopark. As part of these projects, cumulatively, these companies are committed to drilling 27 exploration wells.
  • Thus, these new field is likely to increase the oil and gas capacity of the country. Which in turn is expected to require strong mode of transportation for crude oil. Thus, this is expected to increase the market for transportation sector in the country.



Liberalization of the Oil and Gas Market to Drive the Market

  • Ecuadorian economy is heavily dependent on the upstream oil and gas sector. For example, oil and gas exports accounted for about two-third of the country’s total exports in 2019. Hence, similar to the major oil producing nations with heavy dependence on the oil & gas sector, since 2014, the GDP has registered negative or slow growth rate owing to low oil prices.
  • In 2019, the Ecuador GDP has registered a 1.2% growth rate, when compared to 1.4% in 2018. For Ecuador, the export revenue from crude oil was almost 40% less in 2019 compared to 2014. Therefore, this has negatively impacted the GDP growth rate in Ecuador.
  • The oil and gas industry has been restrained by the corruption and inefficient operations. All the oil and gas sectors, viz. upstream, midstream and downstream, have been dominated by the state-oil companies and as a result, are being effectively run by the government institutions.
  • As a result, in last few years, the state oil companies have witnessed firing of top to senior management level employees. For example, in July 2018, the state oil company, Petroecuador, hired Marcelo Proa?o as chief executive in place of Carlos Tejada, who served for less than a year.
  • The pressure on the government is increasing to address these problems, as the lower oil & gas sector revenues have created major economic obstacles for the country. Since 2018, government has made major changes to address these problems.
  • In August 2018, the mining and energy ministries were merged into Hydrocarbons Ministry. One of the focus of this ministry is to offer the blocks for bidding to increase the private sector investments.
  • In September 2018, the ministry carried out the bidding rounds and by April 2019, seven blocks in Sucumbios province were awarded to private sector companies for exploration, where these companies are committed to drill cumulatively 27 exploration wells.
  • Also, in order to freely produce oil to fullest potential, the government of Ecuador opted out of the OPEC in January 2020 making the country a more attractive destination for the investments. The OPEC has put restriction regarding the oil production on its member states.
  • The new government is keen on encouraging the private sector investments, not only in the upstream sector, but also downstream sector. Thus, the increasing oil and gas exploration and production activities, and new investment are likely to require strong transportation infrastructure for the movement of the produced and refined crude. Therefore, it is likely to drive the midstream market during the forecast period.



Competitive Landscape

The Ecuador oil and gas midstream market is partially consolidated. Some of the key players are Eni SpA, OCP Ecuador, Techint International Construction Corp., Sycar LLC, and Occidental Petroleum Corporation, etc.

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