Ecuador’s oil industry is caught in a death spiral. Decades of corruption, dwindling private investment, corroded infrastructure and environmental disasters are all weighing on production and reserves growth. Environmentally damaging oil spills are a common occurrence, with evidence suggesting that the national government in Quito is failing to prevent these harmful events. President Daniel Noboa’s commitment to reviving the economically crucial oil industry risks serious pollution, especially with cocaine related violence distracting his government. Repeatedly, Ecuador’s government has proven itself incapable of protecting sensitive ecological regions, such as the Amazon.
Data from Ecuador’s Ministry of Mines and Energy shows at the end of September 2025, the Andean nation was pumping 468,729 barrels of crude oil per day. This represents a 1.2% decrease compared to the previous month and a 5.5% year-over-year decrease. Alarmingly, for Ecuador’s oil-dependent economy, that number is lower than for the same period in 2020 when petroleum production collapsed because of a government-mandated pandemic lockdown and sharply weaker oil prices.
Those production numbers highlight the systemic decline in Ecuador’s hydrocarbon output over the last decade, as of the first nine months of 2025. Ecuador pumped an average of 465,369 barrels per day, which, aside from being the lowest petroleum output since 2002, represents a 14% decrease from 2015’s production of 543,095 barrels per day. While a lack of investment after a decade of heavy-handed government intervention deterred private investors, weighing on production, frequent pipeline outages, with ruptures and spills commonplace, are responsible for this decline.
The latest outage to impact Ecuador’s oil production was the shutdown of the state-owned Trans-Ecuadorian System Oil Pipeline (SOTE) from July 2, 2025, to July 17, 2025, due to the risk of ruptures and leaks caused by regressive erosion. The Oleoducto de Crudos Pesados (OCP) pipeline was also shuttered for the same reasons. Petroecuador called a force majeure on all operations, including crude exports. This is a common event that has occurred with greater frequency since the completion of the Coca Codo Sinclair hydroelectric dam on the Coca River in 2016. The hydro-facility has caused severe regressive erosion along the Coca River, which led to the collapse of the San Rafael waterfall—Ecuador’s tallest—in 2020.
The 310-mile (500-kilometer) long, 360,000-barrel-per-day SOTE pipeline, which entered service in 1972, is regularly shut down due to the risks posed by landslides and regressive erosion, especially during storms. Those events can rupture the aging pipeline, which connects oilfields in Ecuador’s Amazon to the Pacific port of Esmeraldas, also home to the country’s largest refinery. The SOTE pipeline ships around 60% of all oil dispatched from Ecuador’s Amazon.
Little appears to have been done by Ecuador’s national oil company, Petroecuador, the pipeline owner, to rectify the issues impacting the SOTE’s operations. This is despite the considerable environmental damage caused by at least 75 oil spills from the 77 pipeline ruptures suffered since the pipeline commenced operations in 1972. The largest spill from the pipeline totaled over 65,000 barrels of crude, occurring in April 1974. This was followed by two further major oil spills of 48,498 barrels in 1977 and 57,161 barrels in 1987. It is estimated that since the SOTE pipeline came online, it has spilled at least 742,000 barrels of crude oil into the nearby environment, including the Coca River, which flows into the Napo, a tributary of the Amazon.
While the number of serious spills has fallen since the start of the 21st century, there have still been 15 such events. The latest spill from the SOTE pipeline is the worst to have occurred in over two decades and among the most severe environmental incidents caused by Ecuador’s oil industry in recent years. On March 13, 2025, a geyser of oil, according to witnesses, spurted from the SOTE pipeline for several hours. Over 25,000 barrels of crude oil spilled into the Esmeraldas River, contaminating nearby farmlands, water bodies, and wildlife refuges.
The spill was so massive, it flowed 50 miles (80 kilometers) downriver toward the Pacific Ocean, directly impacting 111,000 people by damaging their health, destroying homes and contaminating crops. A further 500,000 inhabitants were indirectly affected by the spill, which contaminated drinking water and food sources, leaving communities without potable water for nearly 2 weeks. It is believed that over 60,000 acres of farmland were polluted, and at least 100,000 animals were injured or killed by the oil spill.
Initially, Petroecuador blamed the enormous spill on severe storms causing landslides that ruptured the pipeline, but days later, Ecuador’s Ministry of Energy and Mines and Petroecuador changed the story, blaming the incident on sabotage. While there is a history of local indigenous communities sabotaging industry operations in Ecuador’s Amazon, it is difficult to believe they would intentionally cause such a harmful event. Previous acts of sabotage have amounted to damaging pumping stations and blockading oil blocks to hinder petroleum shipments rather than releasing large volumes of toxic crude oil into their local environment.
As historical data and recent events demonstrate, the SOTE pipeline is a major environmental risk with a long history of significant oil spills. Yet, Ecuador’s national oil company Petroecuador, has taken few, if any, material measures to reduce the risk of pipeline ruptures and subsequent spills. There are also allegations that the state-controlled company, which is 100% owned by Ecuador’s national government, on several occasions failed to remediate spills effectively. This means large volumes of hydrocarbon waste continue to pollute waterways, notably the Coca River, tainting local drinking water and food sources.
Those events, along with the history of frequent oil spills and other environmentally damaging incidents in Ecuador’s Amazon, are driving considerable resentment and loathing among local communities. This is magnified by Quito’s failure to use oil profits to provide adequate infrastructure in the region, despite at least 80% of all petroleum being produced in Ecuador’s Amazonian provinces. President Noboa’s plan to reinvigorate the economically crucial industry, with oil Ecuador’s largest export, is attracting substantial opposition.
There are considerable concerns that the Energy Ministry’s auction of 49 hydrocarbon projects, valued at $47 billion, will lead to further severe environmental degradation in the ecologically sensitive Amazonian region. Especially, with President Noboa scrapping Ecuador’s Environment Ministry and incorporating its functions into the Ministry of Mines and Energy. There are also concerns that Quito’s recently announced commitment to greater private ownership of hydrocarbon projects will further undermine existing environmental protections as the government seeks to boost foreign investment.
By Matthew Smith for Oilprice.com
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