Closure of scandal-ridden Esmeraldas refinery means Ecuador will have to import gasoline for domestic use

Aug 18, 2017 | 7 comments

The 45-day closure of the Esmeraldas refinery for equipment repairs means Ecuador will need to import gasoline. Because the government subsidizes the cost of gasoline for domestic use, the importation will come with a surcharge.

The Esmeraldas oil refinery.

The cost of the gasoline is in addition to the estimated $400 million necessary to repair the refinery’s catalytic cracking unit, or FCC, which is designed to maintain a constant temperature for critical refinery components. Engineers say that temperatures near the equipment range from 180 to 418 degrees Celsius, when it should average less than 100 degrees. They say the high temperatures indicate cracking has occurred in the FCC.

The refinery, operated by government-owned Petroecuador, is the focus of an on-going bribery corruption scandal. More than two dozen officials who managed contracts for upgrades at the plant have been arrested, including a former energy minister.

Workers at the plant told President Lenin Moreno Tuesday that they fear an explosion due to overheating. “I agree that the condition of the FCC creates a safety hazard and it must be repaired as quickly as possible,” the president said, adding that the expense of the work would mean an adjustment to the national budget that he submitted two weeks ago to the National Assembly.

During his tour of the refinery, Moreno expressed anger at the “greedy scoundrels” who managed a $2 billion upgrade of the plant from 2012 to 2016. “The corruption cost the country hundreds of millions of dollars and since many of those managing the project were accepting bribes, they were not concerned about the quality of the work being done. Now, we are forced to pay a high price.”

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Energy Minister Carlos Perez said that the date the facility will be shut down will be determined in the coming days.

Problems at the refinery are a new political battleground between Moreno and supporters of former president Rafael Correa. Vice President Jorge Glas, who oversaw the upgrade of the facility during the Correa administration, claims that the work was completed satisfactorily despite the corruption.

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