BMI's Executive Summary

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The latest Ecuador Oil & Gas Report from BMI forecasts that the country will account for 2.20% of Latin America regional oil demand by 2011, while providing 4.39% of supply. Latin America regional oil demand rose to an estimated 6.87mn barrels per day (b/d) last year. It should average 7.01mn b/d in 2007 and then rise to around 7.82mn b/d by 2011. Regional oil production was last year estimated at 10.97mn b/d. It is set to rise to 11.85mn b/d by 2011. In terms of natural gas, the region last year consumed an estimated 183bn cubic metres (bcm), with demand of 271bcm targeted for 2011, representing 48% growth. Production of an estimated 191bcm in 2006 should reach 272bcm in 2011, and implies just 2bcm of net exports the end of the period. Ecuador's share of regional gas production and consumption is insignificant.

For the whole of last year, our estimates of average crude oil prices are US$61.10 for the OPEC basket, US$65.10 for Brent, US$66.20/bbl for WTI and US$61.30 for Urals. For the first quarter of this year, we have adjusted our forecasts to reflect the weather-induced volatility. The OPEC basket is now expected to have averaged US$54.30/bbl, with Brent at US$57.60; WTI averaging US$58.70 and Urals at US$54.00/bbl. Our projections for 2007 as a whole are barely changed from the last quarterly report. We are still assuming an OPEC basket price average of US$55 per barrel. Based on last year's typical price differentials, this implies Brent at US$58.80, WTI averaging US$59.90/bbl, and Urals at US$55.30/bbl.

Ecuador's real GDP growth is forecast by BMI at 3.4% for 2007, down from an estimated 3.5% in 2006. We are assuming 2.8% growth in 2008, followed by 2.9% in 2009. State-owned Petroecuador cooperates with several international oil companies (IOCs) and they have between them delivered greater volume of crude over the past couple of years. We are assuming oil and gas liquids production of no more than 520,000b/d by 2011, with the country expected to pump 540,000b/d this year. Consumption is forecast to increase by around 3% per annum to 2011, implying demand of 172,000b/d by the end of the forecast period. The export capability would therefore be approximately 348,000b/d by 2011.

In the BMI Business Environment Ranking matrix, Ecuador receives an unchanged composite score of 25, catching up with Mexico to share eighth and last place. The overall business environment can be considered highly unattractive in a regional context, owing largely to a very high level of perceived economic and political risk, offset by the country's above-average reserves-to-production position and near-average oil growth prospects. However, some IOCs are at odds with the government over tax and environmental issues, with some risk of near-term divestment. The latest move to hike taxes for existing oil contracts can only lead to a deterioration of the business environment.

Contents

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Chapter 1 - Executive Brief

Chapter 2 - Regional Market Overview

Latin America Region

Table: Latin America Oil Consumption (000b/d)

Table: Latin America Oil Production (000b/d)

Table: Latin America Oil Refining Capacity (000b/d)

Table: Latin America Gas Consumption (bcm)

Table: Latin America Gas Production (bcm)

Table: Latin America LNG Exports/(Imports) (bcm)

Ecuador

Chapter 3 - Business Environment Rankings

Ecuador

Latin America Region

Business Environment Ranking

Economics – Long-Term Risk

Politics – Long-Term Risk

Oil & Gas Growth

Oil/Gas Reserves

Licensing/Regulation

Competitive Environment

Chapter 4 - Business Environment Overview

Political Risk Summary

Economic Risk Summary

Business Environment Risk Summary

Chapter 5 - Oil Market Outlook

Table: Crude Price Forecasts 2006

Revised Forecasts

Table: Oil Price Forecasts

Chapter 6 - Regional Supply and Demand

Latin America

Table: Oil Production (000b/d) – Latin America

Table: Oil Consumption (000b/d) – Latin America

Chapter 7 - Global Picture

Table: Global Oil Consumption (000b/d)

Table: Global Oil Production (000b/d)

Chapter 8 - Industry Forecast Scenario

Oil and Gas Reserves

Oil Supply And Demand

Gas Supply and Demand

Refining and Oil Products Trade

Revenues/Import Costs

Table: Ecuador Oil & Gas – Historic Data & Forecasts

Other Energy

Table: Ecuador Other Energy – Historic Data & Forecasts

Key Risks to BMI’s Forecast Scenario

Chapter 9 - Economic Outlook

Table: Ecuador Macroeconomic Data & Forecasts

Chapter 10 - Country Snapshot: Ecuador Demographic Data

Section 1: Population:

Table: Demographic Indicators (2005)

Table: Rural/Urban Breakdown

Section 2: Education & Healthcare

Table: Education

Table: Healthcare: Vital Statistics

Table: Healthcare: Expenditure

Section 3: Labour Market And Spending Power

Table: Employment Indicators

Table: Consumption and Stratification

Table: Wages per year

Chapter 11 - Regional Case Study

Investment Needed To Fulfil Venezuelan Potential

Strategic Vision

Export Commitments

Regional Position

Chapter 12 - Competitive Landscape

Table: Key domestic and foreign companies: Ecuador oil and gas sector

Overview/State Role

Andes/CNPC – Summary

Eni – Summary

Occidental – Summary

Teikoku Oil – Summary

Table: Key Upstream Players

RepsolYPF – Summary

Sinopec – Summary

Petrobras – Summary

Perenco – Summary

Burlington – Summary

CGC – Summary

Noble – Summary

Table: Key Downstream Players

Others – Summary

Chapter 13 - Company Monitor

Petroecuador

Eni Ecuador

Company Analysis

SWOT Analysis

Petrobras de Ecuador

Company Analysis

SWOT Analysis

Perenco Ecuador Ltd

Company Analysis

SWOT Analysis

Chapter 14 - BMI Forecast Modelling

How We Generate Our Industry Forecasts

Energy Industry

Cross checks

Sources

Chapter 15 - Appendix: Regional Demographic Data

Wages (ave per annum), US$

Population

Household Spending Per Capita, US$

Private Consumption Per Capita, US$ PPP

Market Size, GDP, US$bn

Network of Latin American Oil & Gas Sources

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BMI's Latin American Oil & Gas Reports are based on an extensive network of multilateral organisations, government departments, oil & gas industry associations, chambers of commerce and company reports. Information sources include: