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ECUADOR
Oil drilling project tests government unity
Luis Ángel Saavedra*
5/16/2007
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Possible oil exploration in national park seems inevitable despite obvious dangers.

The possibility of opening up the Ishpingo-Tambococha-Tiputini block, or ITT, one of Ecuador’s richest areas in biodiversity to oil drilling, has revealed fissures within President Rafael Correa’s government.

The ITT block is located in the Yasuni National Park, a UNESCO Biosphere Reserve in the country’s northeast jungle, and many indigenous communities call it home. But ITT could also become the country’s largest oil field and oil companies are already interested in a piece of the profits — the field is said to have a 20-year supply.

ITT is known as “the crown jewel” among oil barons. Concessions have not yet been offered because the last four Ecuadorian governments were unable to reach an agreement with companies over the terms.
“Ever since they wanted to hold an auction, corruption allegations have been reported,” said Víctor Hugo Jijón, member of state-run Petroecuador’s board.

But ruptured talks between the government and oil companies are not the only reason the ITT project has not moved forward. Indigenous and environmental organizations have monitored the negotiations closely and have railed against the government for the devastating impacts oil drilling could have there.

The area is home to indigenous peoples living in voluntary isolation, including the Taromenani and Tagaeri.

Little choice
Even Correa has said that the best option would be not to drill at all, but that requires an international commitment to supplement at least half of what the poor country could earn from oil drilling there.

“The governments and nongovernmental environmental organizations that are asking us to keep the oil underground should compensate us to maintain the jungle,” said Correa.

Only Norway has shown interest in forming a consortium of governments and nongovernmental organizations to respond to Correa’s request, making drilling in the ITT all but certain. But the debate has now shifted to the Ecuadorian government and has caused tensions between Correa’s energy minister, Alberto Acosta, and the president of Petroecuador, Carlos Pareja.

Pareja proposes that the government should focus on opening ITT immediately, and has already formed a consortium with the giant state oil companies of Brazil and China.

“Pareja wants to sell crude oil,” complained Jijón. “He doesn’t think about a different option, one that would make the state more money.”
Energy Minister Acosta on the other hand wants Petroecuador to have a more active role. Even though he does not propose walking away from the ITT project, he advocates the sale of oil-derivatives, not crude.

“Acosta wants a complete production cycle,” said Jijón. It would “imply drilling in ITT and produce derivatives in a new refinery that would be constructed in the province of Manabi. It’s a complete and long-term policy.”
Acosta’s proposal is based on a consortium of international state oil companies that could include Venezuela, since that country’s state oil company could fund the construction of the refinery.

Should Ecuador’s oil supply be tapped out, Venezuela could provide the refinery with Venezuelan oil from the Ayacucho Field near the Orinoco River.

Campaign promises
But the immediate drilling in the ITT looks most probable, since Correa needs the financial resources to invest more in the social programs he promised on the campaign trail, such as health and education.

“The president kicked out the World Bank, he is not going to negotiate with the International Monetary Fund, he’s prohibited his ministers from going into debt with multilateral bodies, so the only source of income to sustain his government plan is going to be the ITT,” said Alejandro Ponce, the head lawyer for the Citizens for Democracy Movement, that has brought legal action to preserve the Yasuni National Park.

Both proposals will cause environmental damage, despite announcements of measures to preserve the lush area. “Zero impact is impossible, but we’re seeking that the companies use cutting-edge technology to cause the smallest possible impact,” said Correa.

But some, like Ponce, do not believe the president’s promise.
“We’re going to end up finishing the Tagaeri and Taromenani and we’re going to destroy the Ecuadorian Amazon’s last virgin forest,” he said.
Correa’s final decision is likely to cause the first serious conflict between his government and the organizations that support him, since he faces a decision to determine the best way to drill in the area, and turning back is not an option.

He also faces criticism from the indigenous movement and environmental organizations, which until now have vocally supported his government plan, but oppose the drilling in the Yasuni.

 


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