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Country Analysis Brief: Ecuador

October 29, 2012

Country Analysis Brief: Ecuador
Source: Energy Information Administration

By global standards, Ecuador is a relatively small oil producer and exporter. However, the oil sector plays a prominent role in the country’s politics and economic welfare. The oil sector accounts for about 50 percent of Ecuador’s export earnings and about one-third of all tax revenues. Despite being a crude oil exporter, Ecuador must still import refined petroleum products due to the lack of sufficient domestic refining capacity to meet local demand. As a result, the country does not always reap the full rewards of high world oil prices — while these high prices bring Ecuador greater export revenues, they also increase the country’s refined product import bill.

Ecuador rejoined the Organization of the Petroleum Exporting Countries (OPEC) in 2007, after leaving the organization at the end of 1992. Ecuador is OPEC’s smallest oil producer and exporter. Despite an increasingly challenging investment environment, Ecuador has managed to slightly increase production since 2009.

Ecuador’s energy mix is largely dependent upon oil, which accounted for approximately 70 percent of the country’s total energy consumption in 2010. Hydroelectric power was the second largest energy source, though its share of Ecuador’s electricity generation — nearly two-thirds in 2008 — has declined in recent years due to droughts. Non-hydro renewables constitute another important part of Ecuador’s energy mix, almost all of which is attributable to the use of bagasse (the fibrous residue of processed sugarcane) in industry and the traditional use of biomass in rural households. However, estimates of Ecuador’s biomass consumption are inherently imprecise due to the fact that traditional fuel wood is not typically bought and sold in easily observable commercial markets.

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Categories: Ecuador, energy, Energy Information Administration
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