Energy Central Professional


Pampa Energía: We estimate investments of $ 450 million during the 20-year extension of the OCP contract.

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    The director of Pampa Energía in Ecuador, Claudio Freue, says that the Argentine company, which was founded in 2005, is now one of the largest energy companies in the southern cone country and participates in the generation and transmission of electricity (5366 MW) through nine thermal power plants, three hydroelectric plants and five wind farms plus one under construction. It also carries out hydrocarbon exploration and production activities in thirteen production areas and five exploration areas in the most important basins of its country, being the fifth largest gas producer in Argentina. In 2016 it carried out the purchase of Petrobras' assets in Argentina for $ 892 million. Now, the company has agreements that allow it to become the largest shareholder of the company OCP, which manages the Oleoducto de Crudos Pesados (OCP) in Ecuador. Thus, Freue explains how he sees Pampa Energía's participation in the next few years in the country.

    What does the agreement reached with Repsol on the OCP shares consist of and how does Pampa become the largest shareholder of that company?

    Pampa signed an agreement to acquire 29 % of Repsol's shares in OCP. The closing of this transaction depends on certain conditions precedent usual for this type of transactions, among which is the approval of the Ministry of Energy and Mines. Pampa enters as a shareholder of OCP by purchasing in 2016 Petrobras' assets in Argentina (Petrobras Argentina). Along with those assets it acquires the 12 % of OCP that Petrobras Argentina owned at that time. Seeing the potential and strategic relevance of OCP for the Ecuadorian hydrocarbons sector, and taking into account that some partners had made the strategic decision to exit Ecuador, Pampa began to increase its participation through acquisitions. In 2019 it acquires 4 % of Agip, in 2021 14 % of Occidental and now 29 % of Repsol.

    This signed agreement must be reported to the ministry and the ministry must approve it? How is that process progressing?

    Yes, the transfer of shares must be reported to the Superintendence of Market Power Control and to the Ministry of Energy and Mines, which must also approve it. To date, we have already submitted the file to the Superintendency and we expect it to issue a decision very soon. We have also informally anticipated to the Ministry that we have made this presentation.

    How would the new contract or extension for the management of the OCP work and for how many years? Would they pay a fee?

    The contract already provides for the extension of the term of the contract, with the management of the OCP, by virtue of the investments that are made. Given that the investments are very important, especially in the new route that avoids the erosion of the Coca River, we are talking about a 20-year extension. Regarding the tariff, it would be the same as the one currently paid, without updating it as long as there is a commitment from the Government to maintain and/or increase the current levels of transported volumes.

    When should the new contract or extension take place, taking into account that this year the original contract expires, which means that the infrastructure passes into the hands of Ecuador?

    The extension should take place before the end of this year, since the current contract expires in February 2024.

    What are Pampa's investment and transportation goals in the OCP?

    We estimate investments of $450 million during the 20-year extension of the OCP contract, of which more than $200 million would be invested in the first two years to reverse the regressive erosion of the Coca River. As for transportation, in order to amortize the investments without changing the tariff, the operation will have to maintain or exceed a minimum volume of 150,000 barrels per day. Volume is an important issue to consider as it has been in a slight but steady decline for about a decade. OCP continually invests in maintenance and improvements to the pipeline. It has also responded satisfactorily to crude oil transportation demands by maintaining one of the highest performances in the region with minimal service interruptions, including those caused by external events.

    The Government has said that the OCP infrastructure will pass to the State by the end of the year and that based on this fact the new contract will be made, but you are talking about an extension of the contract. Are both positions harmonized or not?

    That has not yet been defined, it is still under discussion, but the idea is to find a meeting point.

    How much are the investments that Pampa has made so far in Ecuador, both in OCP and in other initiatives, and are there other processes in which you are interested in participating?

    Since 2016, when Pampa became a shareholder of OCP, to date investments have been made in OCP for an approximate amount of more than $ 200 million. Regarding other initiatives, from Pampa we are continuously evaluating the opportunities that arise in the oil and energy industry in Ecuador and the region.

    What is it that has awakened Pampa's interest in the country, considering that there are some political complications and this could be a factor to scare off foreign investment?

    We are convinced that the companies that manage to demonstrate efficiency and provide an excellent service are those that can face the different situations that may arise. Our investments are for the very long term, that is why we are confident in our strengths and capabilities to operate efficiently and safely. (I)


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