Ecuador’s President Rafael Correa after the representatives of other OPEC countries supported the idea of restricting oil production. “The sooner the price will find its equilibrium at a reasonable level, the better for producers and consumers, the better for our planet,” said Correa to reporters after visiting session of the government of Ecuador, held in the city of Chillanes the province of Bolivar.
The head of the poorest oil States, OPEC pointed to the need for a speedy solution to low oil prices. Preservation quotations at the current level, according to Correa, is fraught with a sharp decline in oil production, in which the prices will grow immediately to $200 per barrel.
“The reduction in investment, which is going through the oil sector, the decommissioning of hundreds of drilling rigs, including in the U.S., which at these prices can’t make a profit, all this in the medium term will lead to higher prices up to $200,” explained Correa.
He also praised the recent negotiations with Russia and Saudi Arabia, which was agreed in principle possible freeze in oil production. According to Correa, the market still underestimates the possible consequences of the meeting of representatives of the two largest exporters of oil.
Oil production in Ecuador began in 1921, and in 1973 the country joined the Organization of countries-exporters of oil (OPEC). In 1992 the government of Ecuador took the decision to withdraw from OPEC, refusing to limit oil production allocated by the cartel quota and add to the organization’s budget annual contribution to $2 million.
In 2007, after the election of Correa, President, Ecuador rejoined OPEC, and has since remained a member of the cartel. However, the value of Ecuador to OPEC is small — he has the lowest among all the States of the cartel’s proved reserves of oil and gas, in terms of production and export of oil in 2014-2015 Ecuador surpassed only by the civil war-torn Libya. In 2015 in Ecuador were mined daily on average 545 thousand barrels of oil, representing approximately 1.7% of the total production of OPEC.
In August 2015, Correa acknowledged that the revenues from exports produced in Ecuador oil already do not cover the cost of its production. The production cost of a barrel of the President then estimated at $39, a sale price of $30. By the end of 2015 in Ecuador has stopped working for half of all drilling rigs (12 of 24).
During yesterday’s trading session on the stock exchange ICE cost of a barrel of Brent crude oil fell to $32,69, in the end, trading closed at $33,1 per barrel, which is 3,44% below level of closing of previous trading day. Today, oil trades on the ICE not held in connection with the holiday.