Correa says Ecuador oil output to rise in 2010, ending declines

LISBON (Bloomberg) -- Ecuador, the smallest member of the Organization of Petroleum Exporting Countries, will increase crude output next year, ending three years of declines, President Rafael Correa said.

“Production will increase a little,” Correa said in an interview in the outskirts of Lisbon, where he’s attending an Ibero-American summit. “In natural gas, we are exploring and we hope that in the next few months we may have some more concrete data on what the potential reserves could be.”

Correa, 46, who favors state control over the oil industry, said he is trying to increase production by working with government-operated companies based in Russia and Venezuela, such as Petroleos de Venezuela SA. Crude is the country’s biggest export.

Ecuador’s oil production may increase to 180 million barrels in 2010, from an estimated 178 million barrels this year, Correa’s office confirmed after the interview.

“Our policy on non-renewable natural resources is to do all we can do with our state companies, and when we don’t have capacity then we will try to ally with other state companies from friendly countries,” Correa said. “Only in exceptional cases, for issues of technology or capital, would we resort to private companies.”

-----------Increased investment

Ecuador may produce about 470,000 barrels per day of oil this year, down from 503,000 last year, Julio Gonzalez, undersecretary of hydrocarbons policy at the Ministry of Non- Renewable Natural Resources, said in an Oct. 27 interview. Output would be the lowest since 416,000 barrels in 2003, based on Organization of Petroleum Exporting Countries figures.

Crude oil for January delivery gained 62 cents, or 0.8 percent, to $76.67 a barrel in electronic trading on the New York Mercantile Exchange at 7:05 p.m. New York time on Sunday.

To increase production, state-run oil company PetroEcuador will invest about $2 billion this year and probably more next year, according to Gonzalez. The company is studying development of the Oglan oil field in eastern Ecuador, possibly with a unit of China Petroleum & Chemical Corp., he said.

Finance Minister Maria Elsa Viteri on Sept. 29 said Ecuador will seek to negotiate with other oil-producing countries to get financing for strategic investments after the country defaulted on $3.2 billion of its international bonds in Dec. 2008.

-------------Use savings

“Ecuador’s strategy is not to return to the financial markets,” Correa said. “The financing strategy is to optimize the use of our savings and to finance ourselves with friendly countries.”

Ecuador is working with Venezuela, Iran, China and Russia on financing, he said.

An OPEC production cut “is not so necessary,” Correa said. OPEC will have its final meeting of 2009 on Dec. 22 in the Angolan capital Luanda.

OPEC’s 12 members are Algeria, Angola, Ecuador, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, the United Arab Emirates and Venezuela.

Ecuador introduced the dollar as its currency in 2000 amid a financial crisis that caused almost two dozen banks to collapse. Ecuador will continue to use the dollar, Correa said.

Ecuador’s gross domestic product will grow about 1 percent in 2009, according to central bank forecasts. The South American country’s economy could grow 3 percent to 3.5 percent next year, according to Viteri.

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