RIO DE JANEIRO, BRAZIL – Petroecuador is yet another Latin American oil company to cancel an oil sale as the coronavirus pandemic crushes global demand for energy.
The state-owned company cancelled a sale of 2.88 million barrels of Oriente oil this week after receiving disappointing offers, said spokesman Vladimir Cabezas.
“The offers were not what we expected,” he said. It is the first time Petroecuador has not completed an oil bid since the company resumed sales in 2017, after a five-year hiatus.
The sales cancellation is yet another consequence of poor demand and excess supply. While global refineries reduce fuel consumption, the world’s largest producers pump millions of barrels into a war for market share. In this scenario, Brent crude oil, used as a global benchmark, recorded its worst quarter in history.
Ecuador, which left the Organization of Petroleum Exporting Countries in January to pump and sell oil unlimited, has used spot sales as market price indicators.
Much of Ecuador’s oil is committed until 2024 to repay oil-backed loans with Chinese oil companies and Thailand’s PTT. Ecuador has renegotiated terms with banks to offer more oil on the spot market.
The last sale of Petroecuador Oriente, a heavy grade oil exported mainly to refineries on the US west coast, was made to Phillips 66 with a discount of US$2.78 a barrel against the WTI (West Texas Intermediate) benchmark. At the time, WTI crude was traded at around US$50. Today, the oil is quoted at roughly US$20.