Ecuador's national oil company has modified the terms and conditions for buyers of hydrocarbons to provide them with ways to overcome the growing difficulties of securing letters of credit (L/Cs) from increasingly climate conscious banks.

Switzerland's Credit Suisse, Dutch lender ING and France's BNP Paribas decided earlier this year to bow to pressure from campaigners intent on protecting the Amazon rainforest by saying they would stop financing oil from fields that create environmental damage and contribute to climate change ( DC World News, 3 February 2021). Others such as Dutch lender Rabobank and Switzerland's UBS have scaled back too.

L/C alternative

PetroEcuador has said buyers can now make an advance payment in full for purchases of hydrocarbons as an alternative to L/Cs.

"This measure is due to the difficulty in accessing L/Cs in some international entities, after the restrictions on the commercialisation of crude oil extracted from the Ecuadorian Amazon," according to a statement issued by the oil company.

Expanded pool of banks

PetroEcuador has also said that participants may present requisite guarantees from domestic banks backed by a triple-A rated foreign bank.

The list of international banks endorsed by the Central Bank of Ecuador to provide guarantees meanwhile has been expanded from 386 to 750.

This article represents the views of the author and not necessarily those of the ICC or Coastline Solutions.