Ecuador’s Government is currently negotiating the transfer of a privately operated oil pipeline to state control, reported Reuters.  

The transfer would also cover the pipeline’s associated infrastructure, liabilities and assets.  

According to the country’s energy ministry, a mediation agreement had been signed with OCP. 

The company currently operates the 485km pipeline and its contract is set to expire this month. 

The transition to state management was initially planned for 20 January 2024 but has experienced delays.  

OCP, which did not respond to the news agency’s requests for comment, invested $1.4bn in the pipeline’s construction.  

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The pipeline has a capacity of approximately 450,000bpd, although it has been running below that capacity. 

In a significant environmental move in August 2023, Ecuador, following two referendums, agreed to prohibit oil drilling in a protected Amazon rainforest area and halt mineral extraction near the capital, Quito.  

The national oil referendum asked voters to determine the fate of oil drilling in Block 43 within the Yasuni nature reserve, a significant contributor to the country’s oil production, accounting for 12% of its output. 

Petroecuador, the national oil and gas company, warned that the referendum’s approval could lead to a loss of $13.8bn in oil revenues over two decades.  

Nevertheless, the referendum was approved with 59% of voters supporting the ban on drilling in Block 43.  

The decision not only implies lost revenue but also necessitates up to $15bn in indemnity payments to affected oil and mining companies.