INTEGRATION AND COMMITMENT IN THE OIL INDUSTRY
Project Partners:
OCP ECUADOR AND ITS FULL COMMITMENT TO THE REGION’S OIL INDUSTRY
After almost 15 years, the OCP Ecuador pipeline prides its business on experience, safety and successful operations
OCP
Ecuador has established a difference in the country’s oil industry since its conveyance operations began in late 2003, after two months’ worth of test runs. The $1.5bn investment became Ecuador’s largest private investment venture, while also creating 600 permanent jobs, 11,000 of them during the pipeline’s construction. The company’s reins are held by Andrés Mendizábal, who became the company’s CEO in 2011, after first joining in 2002 in the operations area. Mendizábal’s commitment with the sector has taken him to the presidency of CIP (Production Industry Chamber of Ecuador). “From our point of view, contribution toward a better development of the country is a very important concern,” the executive says. The impact OCP has in Ecuador’s oil industry has unleashed the country’s potential from previous limitations such as insufficient conveyance. Since OCP’s opening, production increased in 30% which has resulted in $42bn of revenue for the country.
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The Hydrocarbon Regional Integration OCP Ecuador’s contribution to the oil industry goes beyond benefitting its own country – it has also been overseeing production from southern Colombia’s Putumayo
2001 The year OCP Ecuador was founded
region since 2013. Currently, the Hydrocarbon Regional Integration has allowed more than 12mn barrels from Colombia to arrive at OCP’s deposits in Esmeralda. Most of the Colombian crude oil brought to Ecuador via OCP arrives in
tank trucks at Lago Agrio, where the Amazonas station is located. There is also a secondary pipeline interconnection between OCP and OTA (the Transandino pipeline), which operates on emergencies only. Further expansions on the pipeline
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“Contributing towards a better development of the country is one of our main concerns” – Andrés Mendizábal, CEO for OCP Ecuador
may consider the possibility of adding Northern Peru oil production into the route to OCP’s Amazonas station, though such an investment at this point seems unlikely, and still subject to market conditions. “There’s interest from producers in northern Peru to bring their crude oil here, like Colombia does, but there’s no solid project yet,” Mendizábal remarks.
Batching: An accomplished goal During its 14-year run, OCP Ecuador has already accomplished a series of goals with a positive impact for the company, clients and the oil industry. In 2017, the company’s most important accomplishment was met by transporting batched crude oil. Batching guarantees crude oil maintains its qualities after being shipped through the pipeline
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and arriving at OCP’s Esmeralda facilities. Avoiding further mixture for pipeline conveyance is very attractive for oil producers, as they’re guaranteed their product’s value will not decrease when arriving at its final destination. The engineering and operation teams from OCP Ecuador made this feat possible after long research and testing resulted in optimal results for batched oil runs. “This opens our possibilities of attracting new clients, since this has already resulted in a working agreement with a company producing lighter oil,” adds Mendizábal. Lasting business relationships Maintenance is a key factor for a successful pipeline operation as the one executed by OCP Ecuador, which carries important investments in this area year after year. Suppliers in this area adapt quickly to OCP’s standards and work ethics. “Our usually long engagements with suppliers turn into a mutual learning process,” Mendizábal explains. On its suppliers’ behalf, working under OCP’s strict guidelines and safety standards certainly improves their business across different sectors. Multiple CRS projects Along its 300-mile run, the pipeline travels across many communities. OCP Ecuador is in contact
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with these population groups and during its short existence it has already created more than 700 social responsibility projects under health, education and productivity guidelines, investing $41mn in 14 years. The cornerstone of the excellent relationships with these communities was the creation of the First Environmental Fund of Ecuador, along with ENCANA, the Canadian group that also became one of the pipeline’s main partners. This $15mn initial investment was directed toward specific tasks in education and research. One of the most important corporate social responsibility projects is the “Escuela Plus” programme, in partnership with DIRECTV, helped by the satellite TV company’s infrastructure to broadcast educational content to several schools in communities along the pipeline’s path. After the 2016 earthquake in Ecuador, OCP partnered with the Junior Achievement organisation’s Ecuadorian chapter in order to provide the “topo” squad (“mole”)
training to youngsters, adding expertise for survivor detection and rescue during natural disasters. And one of the most recent programmes involves multiple municipalities in the Amazonian region through a tourism project called The Route of Water, which also runs along the pipeline’s stretch from Quito towards East Ecuador. “We’ve witnessed the will of local governments to go out and develop their regions through tourism, we are supporting this excellent project,” Mendizábal says. New collection scheme from 2018 The OCP Ecuador pipeline is currently working under a “ship or pay” modality, which means it charges for hired capacity instead of conveyed volume following the project’s first design, which could guarantee payments of loans taken to build the pipeline. But from 2018, OCP will charge for its services and conveyed volume. This way, sales will cover operational cost, turning OCP into a profitable business.
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“We’ve prepared for years waiting for this to happen, becoming a profitable business” – Andrés Mendizábal, CEO for OCP Ecuador
“This change is a very important event. We’ve prepared for years waiting for this to happen, to become a profitable business,” Mendizábal explains. Another key goal for the short term is decreasing crude oil conveyance through tank trucks, and instead using pipeline interconnection, which provides a safer environment for this activity. OCP Ecuador’s purposes are very
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clear. There are, of course, subjects which do not depend totally upon the company, but rather answer to the market’s behavior, domestic production volumes and other possible roadblocks, which currently include tax issues in the entire industry, for which the company is open to help solve. This could end up benefitting not only the oil and gas industry, but also Ecuador and the country’s wider development.
600
Employees at OCP Ecuador
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Av. Amazonas 1014 y Naciones Unidas, Edf. Banco La Previsora, Torre A, 3er piso, Quito, Pichincha, Ecuador
Tel. (593) 2 297 3200 Fax. 2 246 9746 www.ocpecuador.com