Guillermo Lasso has unexpectedly won Ecuador’s presidential election run-off, promising free market reforms and an overhaul of contracting mechanisms for the oil sector.

Lasso, a conservative businessman, achieved a narrow victory against Andres Arauz, an economist who headed a leftist bloc aligned with Ecuardor’s former populist president Rafael Correa.


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The result surprised most analysts, due to the strong influence that the exiled Correa still exerts on domestic politics, but Arauz conceded defeat gracefully, and called to congratulate the new president-elect.

In his own time in office, between 2007 and 2017, Correa was closely allied to Venezuela’s Hugo Chavez, and forced international oil companies to switch from production-sharing to service contracts, prompting several of them to leave the country.

Some of those operations shifted to state-run Petroamazonas but, more recently, new multiple service contracts attracted some new investments under Correa’s successor Lenin Moreno.

Ecuador’s active civil society, which includes well-organised indigenous groupings, turned against both Correa and Moreno for economic and environmental reasons.

Lasso, 65, will have to face up to considerable economic difficulties in a country that has long been reliant on oil revenues.

The number of rigs active in the country has bounced back somewhat since the Covid-19 pandemic forced restrictions in the second half of 2020.

The latest monthly report by Quito-based consultancy Jorge Rosas Williams showed nine drilling rigs and 27 workover rigs active in March, while domestic oil production was running roughly stable at close to 500,000 barrels per day.

Local companies Shaya and Wayra Energy and Argentina’s Pluspetrol are currently mobilising land rigs, while state-run Petroecuador recently outlined plans to drill another 13 wells — eight in Tambococha and five in Sacha.

Lasso pledged on Monday that he will tackle the country’s fiscal deficit without resorting to the higher indirect taxation that has been recommended as part of a rescue package proposed by the International Monetary Fund (IMF).

He also told reporters he intends to encourage new investment by proposing a new risk-sharing model for future oil contracts, but promised to respect all existing contracts.

In addition, Lasso promised a review of the impacts of allowing oil operations in the Yasuni national park, in Ecuador's Amazon region.

Petroamazonas has been ramping up production in this sensitive region of high biodiversity, despite continuous opposition from indigenous groups and their supporters.

The audit will seek to determine the costs of environmental remediation to "determine if extraction from those oil wells is really profitable."

Elections are also in full swing in neighbouring Peru, where Pedro Castillo, a former union activist and teacher, looks to be heading for a highly polarised run-off against right-wing candidate Keiko Fujimori, the daughter of the jailed former authoritarian president Alberto Fujimori.