The big problem, however, is how to fill the new heavy crude pipeline (OCP), which should be ready in September. Gutiérrez confirmed what oil analysts have long suspected: that the country does not have enough oil to justify the pipeline. Gutiérrez said that this was the fault of previous governments, which had stalled on issuing oil concessions.
Already the government has ordered the state-owned oil company, Petroecuador, to switch its production to the new pipeline. Gutiérrez said that his predecessor, Gustavo Noboa, should be punished for failing to hold the licensing round to increase oil production.
New round. Gutiérrez said that the government would hold another round of oil concessions in August. Five new fields, currently owned and operated by Petroecuador, will be made available to foreign investors. The goal is to increase oil production by 100,000bpd in two-and-a-half years.
The investors will be paid in oil, Gutiérrez said. It is not clear how long the new concessions will be for: Gutiérrez said that once the foreign companies had recovered their investment (plus, presumably, a profit margin) the fields would revert to Petroecuador.
IMF. The government's claims that it has landed a deal with the IMF seem to be premature. The economy minister, Mauricio Pozo, returned from Washington in early July, claiming that he had sorted out an understanding with the Fund. He immediately announced that the government would cut administrative spending by US$25m this year and next. He stressed that the change did not mean that the budget would be cut (it stands at US$6.7bn for 2003), but that spending would be switched around. He said that the change would produce the money needed to meet the recent pay award for the teachers, which had been budgeted to cost US$30m. The IMF, however, is more cautious. It says the Ecuador deal still has to be approved by the IMF board.
Forecasts. The government's targets for this year are growth of 3%, rising to between 5.5% and 6% in 2004. Pozo expects the country to have produced 152m barrels of oil this year (an average of 416,000bpd). Oil is the country's biggest export and source of government revenues.
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