Repsol SA (REP), Spain’s biggest crude producer, signed a deal with Ecuador’s government to expand an oil operation in the South American country’s eastern Amazon region, two people with knowledge of the deal said.
The new arrangement for Block 16, reached in November, also gives Repsol an additional four years, until 2022, to pump crude from its existing fields, one of the people said. Both asked not to be identified as terms haven’t been made public.
The agreement represents a change of strategy for Repsol, which in 2010 renegotiated its Ecuadorean contracts under threat of expropriation, after attempting to sell its local operations last year, one of the people said. Now the Madrid-based company is trying to get more use out of existing infrastructure and investments by extending the contract, the person said.
Repsol’s press office in Madrid referred questions to the company’s local officials, who declined to comment. Ecuador’s Non-Renewable Natural Resources Ministry’s press office declined interview requests when contacted by Bloomberg News.
Repsol has started building roads into the area, known as Wati, on the southern end of the license. The field holds an estimated 5.43 million barrels, one of the people said. The company agreed to drill two new wells and will perforate an additional five if exploration is successful, the person said.
The first two wells probably will be finished by April 2015 and production could begin as early as June 2015, the person said. The company will also need to extend its pipeline to transport the oil, according to the person.
Repsol produced an average 31,400 barrels of crude a day in Ecuador in January.
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