PetroEcuador Production Falls 8.5% to 349,000 b/d as Labor Groups Warn of 'Silent Dismantling'

PetroEcuador Production Falls 8.5% to 349,000 b/d as Labor Groups Warn of 'Silent Dismantling'

Ecuador's state oil company EP PetroEcuador saw crude production average just 349,167 barrels per day (b/d) in 2025, an 8.5% decline year-on-year from 381,600 b/d in 2024 -- extending a troubling downward trajectory that has raised alarm among labor organizations, energy analysts, and opposition lawmakers about the long-term viability of the country's most important state enterprise.

Production Decline

The 2025 output figure represents PetroEcuador's lowest annual average in over a decade and stands in stark contrast to the company's stated target of 400,000 b/d. The decline is attributed to multiple factors:

• Mature field depletion: Key producing fields in the Oriente basin, including Sacha and Shushufindi -- which have been in production since the 1970s -- are experiencing natural decline rates of 8-12% annually without adequate infill drilling
• Underinvestment: Public capital expenditure in PetroEcuador collapsed 73% to $485.4 million in 2025, down from $1.8 billion in 2022, severely curtailing well maintenance and new drilling programmes
• Equipment constraints: Worker unions report that approximately 30% of workover rigs are non-operational due to deferred maintenance and lack of spare parts
• Pipeline disruptions: Intermittent shutdowns of the SOTE and OCP pipeline systems for emergency repairs resulted in an estimated 12 days of cumulative lost production during the year

Rising Fuel Imports

As domestic production has declined, Ecuador's reliance on imported refined fuels has grown substantially. The country imported 74.3 million barrels of gasoline, diesel, and LPG in 2025, up from 68.1 million barrels in 2024. The import bill represented approximately $5.8 billion at average 2025 prices, creating a paradoxical situation in which this OPEC member state is a net importer of petroleum products in value terms.

Domestic refining output from the Esmeraldas refinery -- the country's largest, with nominal capacity of 110,000 b/d -- averaged just 72,000 b/d due to chronic maintenance issues and feedstock quality challenges. The La Libertad and Shushufindi refineries contributed an additional 27,000 b/d combined.

Labor Warning

The Federacion de Trabajadores Petroleros del Ecuador (FETRAPEC) has issued repeated warnings about what it characterizes as the "silent dismantling" of PetroEcuador. In a January 2026 public statement, the federation cited:

• Workforce reduction: Operational headcount has fallen from 7,200 in 2022 to approximately 5,400, with experienced engineers and geologists departing for private-sector operators
• Deferred maintenance backlog: Estimated at over $800 million across production, refining, and pipeline assets
• Contract irregularities: Allegations that service contracts have been awarded to companies with limited technical capacity at above-market rates

"What we are witnessing is the deliberate weakening of the state oil company to justify privatization," said FETRAPEC president Marco Calderon. "The production decline is not inevitable -- it is the result of policy choices."

Government Response

The Noboa administration has pushed back against the dismantling narrative, arguing that declining state production reflects a strategic pivot toward private-sector partnerships and service contract renegotiations that will ultimately deliver better outcomes for the state.

The government pointed to the recent renegotiation of one major service contract that secured an additional $36 million in private investment commitments for enhanced recovery operations. The Energy Ministry also noted that total national oil production -- including private operators -- remains around 480,000 b/d, as private companies have partially offset PetroEcuador's decline.

Fiscal Implications

The production shortfall has direct fiscal consequences. Oil revenues accounted for approximately 28% of central government income in 2025, but the declining trajectory threatens that contribution. At current Oriente crude prices of approximately $68/barrel, each 10,000 b/d decline in PetroEcuador output represents roughly $250 million in lost annual revenue.

Energy sector analysts note that without a significant reversal in investment trends, PetroEcuador's output could fall below 300,000 b/d by 2028, potentially triggering a fiscal crisis absent offsetting revenue from mining and tax reform.