Ecuador is betting that a combination of higher oil prices and faster drilling can reverse a year of declining production and deliver a windfall for state coffers. Petroecuador, the country’s state oil company, said it projects output of more than 380,000 barrels of oil equivalent per day from May, up from 355,712 barrels in late February, fueled by an aggressive drilling campaign that began this year. In the short term, the company said it would add 2 million barrels to Ecuador’s export supply in March and April to take advantage of prices that have surged since the US-Israeli attack on Iran disrupted global energy markets.
With private operators contributing around 97,000 barrels per day, total national production could exceed 477,000 barrels daily if Petroecuador hits its target — a level that would represent a significant recovery from a disappointing 2025. As of March 2, national production stood at 458,207 barrels per day, according to Ecuador’s hydrocarbon regulatory agency.
Seven Rigs, 36 Wells
The production increase is anchored in the 2026 Drilling Campaign, which Petroecuador launched in February. The company has contracted seven drilling rigs to bore 36 new wells across the Sacha, Lobo, Gacela, Pucuna, Tetete, and Drago fields in the Amazonian provinces of Orellana and Sucumbíos. The first rig is already operational at the SCHD-621 well in the Sacha field, and the incremental output is expected to generate more than $900,000 in daily revenue for the state through February 2027.
María Daniela Conde, Petroecuador‘s acting general manager, said the national production target for 2026 is 167 million barrels, with the state company accounting for roughly 79.5% and private operators the remaining 20.5%. “The planned increase aims not only to recover production levels but also to guarantee resources for the country,” she said.
Recovering From a Bad Year
The urgency behind the campaign reflects the damage done in 2025. Petroecuador’s average output last year fell to 349,167 barrels per day, an 8.5% decline from 2024’s average of 389,976 barrels. The drop was accompanied by rising costs and deteriorating operational indicators across production, transport, refining, and derivatives output, according to the company’s annual statistical report. The combination of falling volumes and rising expenses squeezed margins and reduced the company’s contribution to Ecuador‘s dollarized economy.
The Iran Premium
The geopolitical backdrop has created an unexpected opportunity. The US-Israeli offensive against Iran and the disruption to traffic through the Strait of Hormuz — which handles roughly 20% of global crude shipments — pushed the West Texas Intermediate benchmark to $75.82 per barrel in early March. Since Ecuador prices its Oriente and Napo crude grades against WTI, the surge directly increases the value of every barrel exported, even after the discount applied for their higher sulfur content and lower API gravity.
Contracts to Narrow the Discount
Petroecuador said it is also implementing medium- and long-term international trading contracts designed to reduce the price differential between Ecuadorian crude and the WTI benchmark. The strategy aims to capture more value from each barrel by locking in more favorable terms, rather than relying solely on spot market sales. For a country whose budget depends heavily on oil revenue and whose economy is fully dollarized, the combination of higher volumes, higher prices, and tighter differentials could make 2026 the fiscal reprieve that 2025 was not — provided the drilling campaign delivers on schedule.
This is part of The Rio Times’ daily coverage of Ecuador news and Latin American financial news.
For more context, read Brazil’s Morning Call and the Chile IPSA report.