Ecuador to tender new fuel, sulfur units at Esmeraldas refinery

 (Reuters) - Ecuador plans to issue a tender early next year to find a firm willing to build and operate two processing units at its state-run Esmeraldas refinery, an expansion that would reduce the need for imported fuel, according to a document seen by Reuters and the energy minister.

A prior $2 billion overhaul of the 110,000-barrel-per-day (bpd) refinery by the previous government of President Rafael Correa was insufficient to repair and modernize the Andean country’s largest plant, forcing Petroecuador to plan new maintenance and upgrade projects.

“We have serious problems at Esmeraldas ... we are doing a great effort to maintain the refinery in operation,” Ecuador’s minister of Energy and Natural Resources Carlos Perez told Reuters in an interview late on Thursday.

A $3 million maintenance program is expected to take about 60 days, starting in March. Esmeraldas’ fluid catalytic cracker (FCC) and hydrodesulfurization unit, which are struggling to work properly, will be repaired, the minister said.

Following that program’s completion, Ecuador’s government would award two 20-year contracts to construct new sulfur and fuel processing units under a BOT (build–operate–transfer) model, according to Perez and the document, which details the proposals.

“We have received interest from companies willing to build the fuel unit,” Perez said. He did not disclose the names of the interested contractors.

Ecuador has total refining capacity of 175,000 bpd at three refineries. Most of them produce low octane, high sulfur fuels. The project aims to improve the quality and reduce emissions of diesel and gasoline produced at the Esmeraldas refinery.

Ecuador for a long time has planned a new refinery in Manabi, on the Pacific coast, but the company originally chosen to build it along with Petroecuador, Venezuela’s financially strapped PDVSA, was unable to provide all the funds, causing delays.

Correa’s government was in talks with Japan’s Mitsubishi for building the fuel plant, but the parties did not reach an agreement. South Korea’s SK Engineering and Construction and Australia’s Worley Parsons in 2013 won contracts to upgrade and revamp some of Esmeraldas’ processing units.

The new fuel unit is expected to require up to $1 billion in investment, and the sulfur plant would cost about $200,000, Perez said.

The tender will consider construction time, national content, experience building and operating similar projects and a fee to be paid by Petroecuador per barrel received, according to the document. (Reporting by Alexandra Valencia and Marianna Parraga; editing by Grant McCool)

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