Ecuador has sent in troops to occupy its oil-rich Amazon region and declared a state of emergency, after attacks on installations by community groups cut oil production by about 65 per cent.
The armed forces said on Thursday evening they had secured the eastern provinces of Orellana and Sucumbios, which account for three-quarters of state oil production and about half of private oil production in Ecuador, in order "to guarantee the physical security of the hydrocarbons complex and the return of the flow of petrol".
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The protests are the latest blow to Ecuador's troubled oil sector, South America's second biggest exporter of crude to the US. No new foreign investors have signed exploration or production contracts since 1996, and some of the largest foreign investors are being forced out.
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Local groups began protesting last Sunday, calling for higher wages, more jobs for local people, and the con struction of schools, roads and health clinics. The oil sector agreed last week to devote more funds to infrastructure spending in oil-producing areas, but the deal failed to prevent the unrest. Protest leaders are now demanding outright nationalisation.
The people of South America seem to have hit on a winning formula of response to globalization. They have organized to ensure the benefit of their national resources reach all of the people, not just the rich landowners. Brazil, Bolivia and Venezuela have had similar successes in at least the initial steps towards capturing a piece of the excessive profit in oil and natural gas, but not without significant political consequences both internally and internationally. The US oil interests and the Bush Administration has been working to isolate these countries and pry free the oil and natural gas. They even appear to have funded a move for landowners to secede from Bolivia.
It seems that an organized populous will ultimately benefit, but we will have to wait and see.
Complete Article
FT.com
Ecuador sends troops to guard oil installations from protesters
By Hal Weitzman in Lima
Published: August 20 2005 03:00 | Last updated: August 20 2005 03:00
Ecuador has sent in troops to occupy its oil-rich Amazon region and declared a state of emergency, after attacks on installations by community groups cut oil production by about 65 per cent.
The armed forces said on Thursday evening they had secured the eastern provinces of Orellana and SucumbÃos, which account for three-quarters of state oil production and about half of private oil production in Ecuador, in order "to guarantee the physical security of the hydrocarbons complex and the return of the flow of petrol".
Earlier in the day, Petroecuador, the state-owned company that is the country's biggest producer, suspended all production after some of its installations were occupied by protesters.
EnCana of Canada shut down its output in Orellana on Wednesday. Iván RodrÃguez, the energy minister, said protesters had sabotaged the company's oil pipeline, causing 1,000 barrels of crude to seep into the river near the town of Tarapoa, 230km east of the capital, Quito.
The protests are the latest blow to Ecuador's troubled oil sector, South America's second biggest exporter of crude to the US. No new foreign investors have signed exploration or production contracts since 1996, and some of the largest foreign investors are being forced out.
Occidental, the country's biggest private producer, is mired in a legal dispute with the government, which has accused the California-based company of breaking its contract. EnCana, the second biggest private producer, is desperate to leave Ecuador and is trying to sell its assets to Asian investors.
Production by Petroecuador has slipped steadily from 280,000 b/d in 1987 to 200,000 b/d this year, and it is estimated that its main producing fields are declining at an annual rate of 5 per cent. The poorly managed company recently appointed its third chief executive in nearly four months.
Rene Ortiz of the Ecuadorean Association of Oil Companies, which represents private companies in the sector, told the FT that as a result of the protests, oil production by private companies was down to about half its normal level of 340,000b/d. "This is costing private companies about $9m a day," he said. Mr RodrÃguez said total losses for the sector amounted to some $200m (£110m, €165m).
Local groups began protesting last Sunday, calling for higher wages, more jobs for local people, and the con struction of schools, roads and health clinics.
The oil sector agreed last week to devote more funds to infrastructure spending in oil-producing areas, but the deal failed to prevent the unrest.
Protest leaders are now demanding outright nationalisation.
Mr Ortiz said he was concerned that the oil sector was becoming the target of more politically motivated protest in the period leading up to elections in October 2006. "This started out as a demonstration in favour of more infrastructure spending," he said.
"When the companies agreed to spend more, it transformed into a political project."
Mr RodrÃguez said that even once the protests were brought under control, getting Petroecuador back to its usual production level would take "no fewer than 60 days".
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