Ecuador and Peru Sign Landmark Oil Cooperation Agreement

Peru’s Energy Minister Jorge Luis Montero announced at Perumin 37 that Ecuador and Peru will sign a memorandum to boost their oil sectors through shared pipeline infrastructure.

Ecuador produces roughly 400,000 barrels daily while Peru manages about 40,000 barrels per day, yet Peru operates the underused Norperuano pipeline.

The partnership addresses a critical infrastructure mismatch. Ecuador holds abundant crude but lacks enough pipeline capacity to move oil from southern Amazon fields to market.

Most Ecuadorian crude travels north through the SOTE pipeline to Esmeraldas near Colombia. Peru’s Norperuano pipeline spans 1,106 kilometers from the Ecuadorian border through northern Peru to the Bayóvar port, but operates well below capacity.

Under the agreement, Ecuador will pay transit fees to use Peru’s pipeline network, generating revenue for Peru and reducing Ecuador’s transport costs.

The arrangement could move 100,000 to 200,000 additional barrels daily through Peru’s system, designed for 500,000 barrels but currently handling less than 20,000 barrels.

The economic impact extends beyond transit fees. Oil exports represent about 20 percent of Ecuador’s export earnings, making efficient transport vital for fiscal health.

Peru gains by maximizing pipeline throughput and positioning itself as a regional energy hub. Industry estimates suggest the deal could yield tens of millions in annual fees for Peru and hundreds of millions in improved market access for Ecuador.

The timing reflects broader regional energy trends. Peru’s oil output peaked at 175,000 barrels daily in 2014 but fell to current levels around 40,000 barrels.

Ecuador reached highs of 557,000 barrels daily in 2014 but has struggled with transportation bottlenecks and aging infrastructure. Both countries now prioritize optimizing existing assets over building new systems.

Social and environmental safeguards form a key component. Minister Montero stressed that pipeline operations require strong community engagement and infrastructure support.

Companies must provide electricity, clean water, and sanitation to affected communities while managing social conflicts. Peru also announced a parallel $250 million agreement with the World Bank to modernize its Energy Ministry.

This investment will enhance sustainability practices, social risk management, and operational efficiency to support expanded pipeline activities.

This partnership shows how neighboring countries can tackle infrastructure gaps through cooperation, accelerating timelines, reducing costs, and improving energy security across the northern Andes.

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