Challenges and Opportunities in the Oil Industry in Ecuador

Abstract

Oil has been central to global economic development. Since the discovery of the first deposits in Ecuador, it became the basis of national development. However, the distribution of wealth has not been equitable, because the large global value chains cover the activities carried out by a company, from the design to the sale of the product or service. Although oil activities include exploration, extraction, refining, and marketing, Ecuador has been limited mainly to the export of crude oil, without achieving significant diversification. This study seeks to examine the impact of oil exploitation in the country and analyze the insertion of local industry in the production chains related to the manufacture of "Christmas tree" type valves, essential in oil extraction. The ABC method was applied to classify the components according to their importance. The letter A represents 80% of the value of the product, while category B and C the rest. This method allows you to establish management strategies in the supply chain. The results show that more than 90% of its components are imported, evidencing the limited capacity of the national industry to fully integrate into the global value chain of this industry, even after more than 50 years of oil exploitation. Although oil has generated significant revenues, it has accentuated external dependence and increased debt, without solving structural problems such as poverty and social inequalities.