The OCP Ecuador consortium will spend US$1.3bn to build the OCP heavy
crude pipeline, or about US$200mn more than specified in the contract
signed with the government, OCPs new president, Andy Patterson, said
Tuesday in a statement.
The additional money will be used to accelerate work on the project,
which has been delayed some two months due to work stoppages and protests
by groups such as Amazon Watch, which are concerned about the environmental
impact of the project.
German bank WestLB, which issued a US$900mn loan to fund the project,
has recently been the target of environmental protests.
The OCP consortium had originally planned to complete work on the
pipeline by March 2003, but now expects to finish by July 2003, when the
25-month term specified in the original contract ends. Construction began
in June 2001.
The OCP Ecuador consortium is comprised of the US’ Occidental
Petroleum (NYSE:OXY) and Kerr McGee (NYSE:KMG), Spanish-Argentine group
Repsol-YPF, Italy’s Agip, Canada’s Alberta Energy, Argentina’s Perez
Companc and construction firm Techint.
The US$200mn increase will be financed by all consortium members
equally, not implying any increase in costs to the Ecuadorian government,
Patterson said.
The project plans to work on 13 different fronts instead of the
present 11, meaning that additional machinery such as earth movers, welding
gear and pipe layers will be needed, as well as additional labor.
OCP expects to hire an additional 1,800 workers, bringing the total
number of jobs generated by the project to 9,500 – 90% of them Ecuadorian.
OCP will employ some 300 of those workers permanently to manage the
pipeline’s operation.
OCP has paid Ecuador’s government US$56mn in taxes to date and will
pay US$155mn by start of operations. Total tax revenues from the project
are expected to reach US$1.25bn.
The new pipeline will have a capacity to transport on average 450,000
barrels/day (b/d), though maximum capacity will reach 518,000 b/d.
The 503km pipeline will transport heavy crude from oil fields in the
eastern Ecuadorian Amazon rainforest region across the Andes to a port on
the Pacific coast.
