Ecuadorian government seeks to boost oil activity

Subject

The outlook for the oil sector.

Significance

While Ecuador is the smallest member of OPEC, oil is its largest export and the government's primary source of revenue. The collapse of world oil prices has forced the government to introduce import controls to support the balance of payments and cut public spending to reduce the budget deficit. However, rising levels of oil production have softened the blow of falling oil prices. The government hopes to continue this trend by attracting new investment into the oil sector, despite the downturn in the world market.

Impacts

• The perilous state of the balance of payments and public finances will increase the need to attract new foreign investment into oil.
• Chinese oil companies are likely to increase their presence in Ecuador, reflecting trends elsewhere in Latin America.
• Development of the oil fields previously integrated into Yasuni/ITT should increase total oil output significantly from 2018-19.