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Economy & Business - March 2021

ECUADOR: An uphill struggle to increase oil production

Last year was a disastrous year for Ecuador’s national oil industry with exports down around 40% in monetary terms due to a fall in demand and low prices stemming from the coronavirus (Covid-19) pandemic and the temporary rupture of the country’s two oil pipelines. While prices have recovered in recent months, state crude extraction has remained stagnant and, without significant efficient investment, will continue to progressively fall as oil fields mature. The government led by President Lenín Moreno has sought to incentivise private sector investment in the sector to increase the volume of exports which would help maintain a positive balance of payments and provide all important royalties to the much-indebted state. Nonetheless, with international investors more cautious about investments in the oil sector in general, but especially in the Ecuadorean Amazon due to environmental and social risks, the success of this strategy is in doubt.

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