The Chinese have taken control of Ecuador’s oil sector, according to a special report by Reuters’ Joshua Schneyer and Nicholas Medina Mora Perez.
After Ecuador defaulted on $3.2 billion in debt in 2008 and lost access to credit markets, the Chinese became the country’s lenders.
The country pumps around 520,000 barrels per day (bpd), making it the smallest producer in OPEC.
“In exchange for covering 61% of the country’s $6.2 billion financing needs in 2013, China last November secured the rights to up to 90% of Ecuador’s oil shipments in coming years (for comparison, China holds 23% of U.S. debt just held by foreigners),” a summary in the Business Insider said.
Ecuador’s annual oil sales are valued at $13 billion, Reuters said, and the U.S. is the largest buyer of its oil.
“President Rafael Correa, a socialist who is critical of the power that Western oil majors and private energy trading firms once held in Ecuador, has touted the Chinese deals as a triumph of trade between close allies,” Schneyer and Medina Mora Perez of Reuters said.
According to Reuters, “about 60 percent of Ecuador’s oil shipments are handled by PetroChina, the world’s second-largest publicly traded oil firm after ExxonMobil and the listed arm of state-owned parent China National Petroleum Corp (CNPC). State-run Unipec – the trading unit for giant Sinopec Corp – and other Chinese firms get smaller volumes, the schedules show.”