Hydrocarbons Law as Amended

Last updated: 30 March 2022

Pursuant to this law, hydrocarbon deposits in the national territory, including the areas of the territorial sea, belong to the state and their exploitation shall be in line with sustainable development and the protection of the environment.


This shall be the responsibility of public hydrocarbon companies such as the National Oil Company (EP PETROECUADOR). Exceptionally, such upstream activities may be delegated to national or foreign companies. Therefore, the Ministry of Hydrocarbons may enter into association or participation contracts as well as other contractual means, including service provision. The transport of hydrocarbons by pipelines, their refining, industrialisation, storage and marketing shall likewise be carried out directly by public companies or be delegated to national or foreign companies. 


This regulation creates the Agency for the Regulation and Control of Hydrocarbons, a technical-administrative body in charge of regulating, controlling and supervising technical and operational activities in the different phases of the oil and gas industry, including exploration, exploitation, industrialisation, refining, transportation, and commercialisation of hydrocarbons. It is responsible for auditing hydrocarbon activities, directly or through specialised companies, and applying pertaining fines and penalties.


Furthermore, oil and gas developers are required to prepare environmental impact studies and environmental management plans to control and compensate for environmental and social impacts derived from their activities. These studies must be evaluated and approved by the Ministry of Energy and Mines in coordination with the competent environmental authorities. Moreover, oil and gas developments shall not cause harm to people, property or the environment. Periodically, socio-environmental audits will be carried out to monitor these undertakings.


This legislation does not mention methane, but states that natural gas obtained from the exploitation of oil fields belongs to the state, and may only be used in amounts that are necessary for operations or reinjected to reservoirs, after authorisation from the Ministry of Hydrocarbons. Additionally, contractors or associates shall deliver to PETROECUADOR, free of charge, gas from condensate reservoirs not used for the abovementioned cases if so required. PETROECUADOR will pay only the expenses of adequacy and delivery undertaken by contractors or associates. Gas surpluses that are not used by PETROECUADOR nor by contractors or associates, or that cannot be re-injected in the respective fields, shall be the subject of special agreements. Contractors or associates may not vent or flare natural gas without authorization from the Ministry of Hydrocarbons.


The Hydrocarbons Law also sets education requirements, refers to information provision, pricing and royalties, and applicable sanctions.

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