Explainer – Ecuador and Oil – Glenn Specht Photographer

Here we go—Ecuador & oil, big-picture explainer.

1. Why oil still matters so much to Ecuador

Oil is still one of the pillars of Ecuador’s economy, even if its relative weight is slowly shrinking.

In 2023, crude petroleum was Ecuador’s single biggest export, worth about US$13.1 billion.
At the same time, Ecuador spent about US$4.2 billion importing refined fuels (gasoline, diesel, etc.), because its refineries cannot fully cover domestic demand.

Oil brings in hard currency for a dollarized economy and finances a good share of the national budget, but the country still depends on importing finished fuels and on sensitive infrastructure (pipelines, refineries) that is aging or vulnerable.

2. Production: how much oil does Ecuador pump?

Recent data show:

Around 485,000 barrels per day (bpd) of crude oil are currently produced in Ecuador.
- Roughly 388,000 bpd come from state-owned Petroecuador.
- Around 97,000 bpd come from private companies working under various contracts.

Most production is:

In the Amazon (Oriente) region – classic onshore fields plus newer blocks.
In the ITTs (Ishpingo–Tambococha–Tiputini) area inside or near Yasuní National Park, where production is now being wound down after the 2023 referendum result, which ordered a halt to operations in Block 43.

Exports:

In 2024, crude exports averaged about 356,000 barrels per day, up from ~309,000 bpd in 2023.
So, roughly speaking, about three-quarters of Ecuador’s crude production is exported, and the rest is sent to domestic refineries.

Historically, Ecuador was a member of OPEC, but it left the organization on 1 January 2020 to escape production quotas and try to raise revenue by pumping more crude.

3. Refining: three aging refineries and a new one on the drawing board

Ecuador has three main refineries, all owned by Petroecuador:

Esmeraldas – ~110,000 bpd nominal capacity, on the coast.
La Libertad – ~45,000 bpd, in Santa Elena.
Shushufindi – ~20,000 bpd, in Sucumbíos (Amazon).

In 2023, the three refineries produced about 63.9 million barrels of refined products, of which:

~41 million barrels from Esmeraldas,
~14 million from La Libertad,
~8 million from Shushufindi.

Despite this, Ecuador still imports large volumes of gasoline, diesel and LPG because:

The refineries are old and often operate below nameplate capacity.
They weren’t designed to produce the full slate of fuels the country now demands.

In April 2025, a 6.3-magnitude earthquake forced Petroecuador to declare an emergency at the Esmeraldas refinery, temporarily suspending some operations and highlighting the vulnerability of key infrastructure.

To ease these constraints, the government has announced a project for a new 80,000 bpd refinery in Santa Elena (about US$3.5 billion, with DRL Engineering involved). If built and run well, it could reduce fuel imports—but it also raises questions about financing, governance, and long-term demand in a decarbonizing world.

4. Exports vs. imports: the paradox

Using 2023 trade data:

Top export: Crude oil (US$13.1B).
Top import: Refined petroleum (US$4.22B).

So Ecuador is:

A major crude exporter, earning foreign exchange;
Yet also a large net importer of fuels, which are often subsidized domestically.

This paradox means:

Budget exposure:
Higher oil prices bring in more export revenue but also increase the cost of imported fuels and subsidies.
Infrastructure pressure:
When pipelines or refineries fail, Ecuador sometimes has to import even more fuel on an emergency basis, reducing net benefit.
- In March 2025, a rupture of the SOTE pipeline spilled ~25,000 barrels, affecting rivers, beaches, farmland and 5,300 people, and temporarily forcing a halt in Oriente exports.
- In July 2025, Petroecuador declared force majeure across operations because erosion along the Coca River threatened both the SOTE and OCP pipelines, causing big production cuts.

5. China and oil-backed loans: the long shadow

One of the most important stories in Ecuador’s oil history over the last 15 years is its relationship with Chinese credit.

Between roughly 2009 and 2016:

Ecuador signed at least 15 credit lines with China under President Correa, totaling around US$11.3 billion in loans.
Many of these were oil-backed loans:
- Ecuador committed future oil deliveries (to PetroChina, Unipec, PTT) in exchange for up-front cash.
- One early deal in 2009: US$1 billion loan vs. 69 million barrels at 7.25% interest, with middlemen allegedly taking US$1 per barrel in commissions.

Consequences today:

Commercial obligations:
Even after some contracts are renegotiated, Ecuador often must sell part of its oil output to Chinese state companies under long-term contracts, which may give less flexibility than selling freely on the spot market.
Fiscal pressure and IMF ties:
Heavy debt and reduced room for maneuver pushed Ecuador toward multilateral support, including a 27-month IMF Extended Fund Facility (EFF) program approved in 2020 (later modified) aimed at stabilizing public finances and reforms.
Environmental and social costs:
Oil-for-loans deals encouraged expansion into the Amazon, often in sensitive areas and indigenous territories, triggering conflicts, court cases and international criticism.

In short: those earlier Chinese deals gave short-term cash, but left long-term commitments that still shape how and where Ecuador produces and sells oil.

6. Venezuela and regional context

Compared to China, Venezuela is more a cautionary mirror than a direct financial partner:

Both countries relied on oil-backed spending and struggled when prices fell.
Both share the experience of state-led oil sectors, politicization and infrastructure decay.

Direct, large-scale energy cooperation (like big cross-border pipelines or joint refineries) between Ecuador and Venezuela is limited. The main “Venezuela factor” is:

Migration & regional politics:
Millions of Venezuelans have migrated through or into Ecuador, influencing labor markets, social spending and politics—indirectly linked to the collapse of Venezuela’s oil economy.
Example of risk:
Venezuela’s crisis is often cited by Ecuadorian economists and politicians as a warning about over-dependence on oil rents and weak institutions.

So Venezuela affects Ecuador more as a reference case and source of migrants than as a direct economic partner in current oil trade.

7. The future: expansion vs. diversification

Government expansion plans

The current government has talked about attracting tens of billions of dollars in oil investment:

One plan presented in early 2025 aims for about US$42–47 billion in oil & gas investments through 2029, including new blocks and infrastructure.
The Energy Ministry has floated auctions for around 49 blocks, many in the Amazon. Indigenous organizations say at least 18 of those overlap their territories and accuse the state of violating consultation and court rulings.

Ambition:

Raise output above current ~480–490k bpd, improve infrastructure, and stabilize fiscal accounts.

But reality check:

Environmental and social resistance is strong and increasingly supported by courts and international opinion.
The Yasuní referendum showed voters are willing to limit oil extraction for environmental reasons.
Global markets are slowly shifting under climate policies, which may cap long-term demand.

Diversification and non-oil exports

At the same time, non-oil exports are gaining importance:

Between January and August 2025, Ecuador’s non-oil trade balance recorded a surplus of US$3.7 billion, up 63.5% vs. the previous year.
Non-oil sectors like bananas, shrimp, flowers, cocoa, manufactured goods and services are becoming stronger pillars of the export economy.

This suggests a future where:

Oil remains important, especially for fiscal accounts and external balances,
But relative dependence could slowly decline if non-oil exports and tourism continue to grow and if the state manages public finances more sustainably.

8. Bottom line

Ecuador is a medium-sized oil producer (~485k bpd) with big crude exports but also large fuel imports due to limited and fragile refining.
Its current budget and external accounts are still sensitive to oil prices and volumes.
China’s oil-backed loans from 2009–2016 continue to influence how Ecuador sells its crude and finances its debt.
Environmental risks, indigenous resistance, pipeline erosion and spills are increasingly shaping what is politically and technically possible.
The future will hinge on how well Ecuador can:
- Modernize and safeguard its oil infrastructure,
- Avoid repeating costly oil-for-cash deals,
- And grow non-oil exports so the country is less hostage to each fluctuation in the oil market.

Short EN/ES roundup

EN:
Oil remains a backbone of Ecuador’s economy, but it is also a source of risk. Production is close to half a million barrels per day, most of it exported as crude, while the country still imports billions of dollars of gasoline and diesel due to limited refining. Past oil-for-loan deals with China brought fast cash but left long-term obligations and helped push drilling deeper into the Amazon. Today, new expansion plans face strong resistance from indigenous communities and environmental groups, even as the government looks to oil to stabilize public finances. At the same time, non-oil exports are growing, giving Ecuador a chance—if policy is smart—to gradually reduce its dependence on oil.

ES:
El petróleo sigue siendo una columna vertebral de la economía ecuatoriana, pero también una fuente de riesgos. La producción bordea el medio millón de barriles diarios, la mayor parte exportada como crudo, mientras el país todavía importa miles de millones de dólares en gasolinas y diésel por su limitada capacidad de refinación. Los acuerdos de “petróleo por préstamos” con China dieron liquidez rápida, pero dejaron obligaciones de largo plazo y alentaron la expansión hacia zonas sensibles de la Amazonía. Hoy, los nuevos planes de expansión enfrentan una fuerte oposición indígena y ambiental, al mismo tiempo que el Gobierno ve en el petróleo una vía para estabilizar las finanzas públicas. En paralelo, las exportaciones no petroleras crecen, ofreciendo la oportunidad —si se toman buenas decisiones— de reducir poco a poco la dependencia del petróleo.

Short version:
It’s definitely not dead, but it’s still in the “serious proposal / early-structuring” phase, not a done deal.

Explainer follow-up status of new refinery

1. What’s actually happened so far

There’s been quite a lot of real movement in 2024–2025:

Project & location defined:
The government has formally presented a new high-conversion refinery in Monteverde (Santa Elena), ~80,000 bpd in the first phase (expandable to 160,000).
Private promoter in place:
The project is led by DRL Engineering (Houston) through its Ecuadorian subsidiary MV Refinerías S.A. (set up in 2024). (www.ecuavisa.com)
Multiple MoUs signed (paperwork, but real milestones): (LA HORA)
- Jul 30, 2024: First MoU between Energy Ministry and DRL/MV Refinerías.
- Apr 23, 2025: Second MoU between Petroecuador and MV Refinerías to define a commercial relationship (Petroecuador as crude supplier and/or buyer of products, but not operator).
- Apr 2025: Publicly announced MoU with MV Refinerías to develop the project (Noboa government + Petroecuador + MV).
Public presentations & political backing:
- January 2025: Government puts the new refinery in its US$42bn hydrocarbons investment plan (2025–2029).
- June–July 2025: Detailed progress articles show the project as an active government priority with technical roadmaps and renderings, still emphasised as 100% private investment of around US$3.5–3.6 billion. (LA HORA)

So in political/official terms, the project is very much alive and being pushed.

2. What hasn’t happened yet (and could still go sideways)

All the good press doesn’t mean shovels in the ground tomorrow. The project still needs:

Definitive permits
- Refining & industrialization license
- Construction and operation permits
  The Primicias and Energy Ministry pieces make it clear that as of mid-2025, DRL/MV is still in the permitting and structuring phase. (Primicias)
Full environmental licensing & social process
- A complex, high-conversion refinery and new dock in Monteverde will need full EIA, consultations, and possibly court tests.
- BNamericas and Amazon Watch note that Ecuador is already under pressure over oil expansion and that DRL’s technology and business model face questions.
Financial closure
- Official line: 100% private capital (no direct state money). (LA HORA)
- That means DRL/MV must actually raise ~US$3.5–3.6B in a country with security, political and demand risks. Not impossible, but not trivial.
Final investment decision & real construction start
- The government has talked about starting construction around late 2025, but that’s aspirational; no source shows a formal “FID” or signed EPC/contracts at that level yet.

3. So… is it going to happen or not?

Given what’s public as of mid-/late-2025:

Politically & on paper:
- The project is very much alive.
- It’s central to Noboa’s pitch of attracting private investment, reducing fuel imports, and creating jobs in Santa Elena. (LA HORA)
In practical, engineering/finance terms:
- It is still an early-stage, high-risk project:
  - Only MoUs and presentations so far,
  - Permits and environmental processes pending,
  - Financing not publicly locked in,
  - And broader doubts in the industry about whether Ecuador’s declining crude production and political volatility can support such a big new plant.

If you want the blunt answer:

It’s not dead at all; it has more momentum than previous “refinery dreams” (because there’s a named private promoter, MoUs with Petroecuador, and a concrete site in Monteverde).
But it’s still at the stage where a change of government, financing problems, environmental pushback, or a shift in oil policy could kill or shrink it before real construction.