VZCZCXYZ0012
OO RUEHWEB
DE RUEHQT #0085 0291451
ZNR UUUUU ZZH
O 291451Z JAN 08
FM AMEMBASSY QUITO
TO RUEHC/SECSTATE WASHDC IMMEDIATE 8343
INFO RUEHBO/AMEMBASSY BOGOTA PRIORITY 7289
RUEHCV/AMEMBASSY CARACAS PRIORITY 2851
RUEHLP/AMEMBASSY LA PAZ JAN 0881
RUEHPE/AMEMBASSY LIMA PRIORITY 2326
RUEHGL/AMCONSUL GUAYAQUIL PRIORITY 3240
RUEATRS/DEPT OF TREASURY WASHDC PRIORITY
UNCLAS QUITO 000085
SIPDIS
SENSITIVE
SIPDIS
TREASURY FOR MEWENS
E.O. 12958: N/A
TAGS: ECON EPET EINV EC
SUBJECT: ECUADOR ECON WEEKLY: 2007 Economic Performance;
Petroecuador's 2008 Budget; PDVSA to Explore for Gas
1. (U) The following is a weekly economic update for Ecuador that
reports notable developments that are not reported by individual
cables.
Ecuador's 2007 Economic Performance
-----------------------------------
2. (SBU) According to data from Ecuador's Central Bank Ecuador
(BCE), GDP grew 2.65% in 2007 (less than the 3.4% rate previously
projected). According to analysts, one of the main reasons was
weakness in the oil sector due to decreased state and private sector
investment, coupled with petroleum protests in the Amazon region
which lowered production. President Correa noted that he was
pleased with Ecuador's non-oil growth, which was 4.4% in 2007. The
BCE expects Ecuador's oil production to increase by 4.25% in 2008
and drive economic growth, as a result of a rise in private and
public investment in the sector and an increase in oil exports.
(Comment: Private sector analysts criticized the BCE's forecasts as
too optimistic. The IMF estimates GDP growth at 1.8% in 2007 and
2.7% in 2008.)
Petroecuador 2008 Budget Increases
----------------------------------
3. (U) On January 17, state oil company Petroecuador's board
approved a 2008 budget of $4.8 billion. $1.7 billion of that is
slated for investment, an increase of 90% in comparison with last
year's investment budget. Ecuador's petroleum fund Feiseh will
finance $1.3 billion of Petroecuador's investment plan, while the
remaining $4 million will come from the national budget. With this
increased investment, Petroecuador plans to increase production to
meet its 2008 oil production goal of 188 thousand barrels per day
(November 2007 oil production was only 168 thousand oil barrels per
day).
PDVSA to Explore for Natural Gas in Guayaquil
---------------------------------------------
4. (U) On January 7, Ecuadorian and Venezuelan Petroleum Ministers
signed an agreement for Venezuelan state oil company PDVSA to
conduct exploration studies for natural gas in block 4 on the gulf
of Guayaquil. This extends the cooperation agreement signed in
August 2007 between state oil companies Petroecuador and PDVSA.
PDVSA Gas (which runs several gas projects in Venezuela) plans to
finance the studies which are expected to cost $150 million. If the
results of the studies are positive, further discussions would take
place.
JEWELL