Ecuador seeking return to OPEC

The Ecuadorian government announced Thursday that it is seeking to rejoin the Organization of Petroleum Exporting Countries (OPEC).

… Ecuador joined OPEC in 1972 but left 20 years later, mainly due to not agreeing with the oil cartel’s quota requirement.

… The oil income remains a critical part of the country’s economy, accounting for 69 percent of its exports. From January to November daily oil output stood at 539,000 barrels, and crude exports exceeded 6.4 billion dollars.

[People’s Daily (Xinhua)]

Ecuador open to private oil investment

Quito: Ecuador’s week-old leftist government has said it was open to private energy investment despite plans to review oil contracts amid a wave of resource nationalism in allied Venezuela and Bolivia.

President Rafael Correa, a friend of Venezuela’s socialist leader Hugo Chavez, has pledged to fight poverty in a radical four-year term by rewriting energy deals, foreign debt accords and the constitution of the unstable, oil-exporting nation.

Ecuador’s finance minister said authorities have discussed possible loans from Venezuela for up to $1 billion, which could further cement Ecuador’s ties to Latin America’s harshest critic of Washington-backed, free-market reforms.

But in remarks that may ease some investor fears, Energy Minister Alberto Acosta said the Correa administration would not apply nationalisation policies to Ecuador’s oil fields and he welcomed private investment in electricity generation.

… He ruled out auctioning oilfields formerly run by US-based Occidental Petroleum Corp, which is requesting $1 billion in damages after Ecuador seized its operations over a contract dispute last year.

But Ecuador plans to hold bidding rounds for oilfields and offshore natural gas blocks, he said.

Still, he also said the Andean country was seeking to join the Organisation of Petroleum Exporting Countries (Opec) and mulling electricity subsidies for Ecuador’s poor majority, reflecting the populist ideas that helped catapult Correa into office.

… Finance Minister Ricardo Patino said … $1 billion in loans from Venezuela would improve Ecuador’s cash flow situation. That could give the government more resources to pay debt - but also draw Correa closer to the increasingly radical Chavez.

… Ceremonies for his inauguration were dominated by [Evo] Morales, who last year nationalised gas fields, and Chavez, who has extended his nationalisation drive this year with moves against private oil and electricity companies.

[Gulf News (Reuters)]

Occidental Files Claim Against Government of Ecuador

On May 18, 2006, Occidental Petroleum Corporation today filed an arbitration claim against the Government of Ecuador, seeking redress for Ecuador’s illegal confiscation of Occidental’s Block 15 operations in Ecuador. The company filed its claim with the International Centre for Settlement of Investment Disputes in Washington DC, invoking the protections of the US-Ecuador Bilateral Investment Treaty. Occidental has requested the arbitration panel order interim relief by restoring its rights in Ecuador and preventing Ecuador from replacing Occidental with another third party operator in Block 15 until its claims can be decided, a process that could take well over a year.

[Occidental Petroleum Corporation]

Ecuador cancels oil contract with Occidental Petroleum - May 2005

Ecuador, which has Latin America’s fifth largest oil reserves, cancelled Occidental Petroleum Company’s operating contract in the country and ordered the US firm’s assets seized.

Energy Minister Ivan Rodriguez made the announcement after Occidental was found guilty of illegal sale of its stock and after rejecting its attempt to avoid the sanction.

‘We have decided to accept the suit and petition brought by Petroecuador and the prosecutor’s office, and the joint venture contract has been declared void,’ Rodriguez said in a news conference.

… Rodriguez said the firm would have to ‘immediately’ hand back its oil fields and production machinery to the state firm, Petroecuador.

… There were widespread protests by indigenous groups in February demanding a greater share of the country’s oil profits.

[Forbes.com]

Ecuadorian President Approves Pipeline Backed by Occidental - June 2001

The president of Ecuador, Gustavo Noboa, recently gave the go-ahead for the construction of a US$1.1 billion oil pipeline in the northern part of the country that is highly likely to have severe environmental and social impacts for local communities. With his approval Noboa declared “war” on environmental groups in Ecuador, in particular Accion Ecologica who is adamantly opposed to the pipeline. “I’m not going to let anyone screw with the country, I’ll give them war!” said Noboa.

The pipeline, known as the OCP (Oleoducto de Crudo Presado) is controlled by an international consortium of companies including Alberta Energy, Occidental Petroleum, Repsol-YPF, Agip, Perez-Companc and Kerr-McGee. Occidental Petroleum in particular has a heinous environmental and human rights track record in nearby Colombia and was key in lobbying the US government to finance Plan Colombia.

… Ecuador’s past experience with pipelines gives little confidence that the OCP will be trouble-free. Less than a month ago, the state owned pipeline ruptured due to a landslide, spilling 7,000 barrels of oil into the forest. This accident is the 14th major oil spill from this pipeline since 1998. In the past 3 years, a total of 145,000 barrels of oil have been spilled into the ecosystem, causing devastating impacts including soil and groundwater contamination. As the OCP is also in a landslide and earthquake prone area, accidents are inevitable.

Less concerned with environmental and local economic impacts, President Noboa has approved the project which is he expects will increase oil export and therefore annual GDP by 2.5% for the next 20 years.

* “Ecuadorian President Declares “War” On Environmentalists Over Criticism Of Pipeline; Nobody is going to screw us,” May 18, 2001;

* “Ecuador boosts exploration efforts,” The Oil and Gas Journal, April 12, 2001;

* “Oil and cloud-forests don’t mix,” The Economist, June 21, 2001

[moles.org]

Sat 10 Feb 2007: Permalink

“Defense Minister Guadalupe Larriva, a 50-year-old former teacher and senior official of a socialist political party supporting Correa, died in the crash in a Pacific coastal province east of Quito.” Link.

Ecuador’s defense minister dies in helicopter collision

Ecuador’s first female defense minister was killed in a mid-air collision of two helicopters [January 24, 2007] after only nine days in office, government and military officials said.

… Defense Minister Guadalupe Larriva, a 50-year-old former teacher and senior official of a socialist political party supporting Correa, died in the crash in a Pacific coastal province east of Quito, Correa told reporters.

Correa gave no specific details on the cause of the collision that killed Larriva, her teenage daughter and five military personnel aboard the Gazelle helicopters.

… Ecuadorean Vice President Lenin Moreno said he received a report from the military saying it was an unfortunate accident. Other Cabinet members dressed in black gathered inside Moreno’s home in Quito to mourn Larriva’s death.

Correa wanted Larriva, one of a few civilians to lead Ecuador’s 176-year-old military, to control an institution that has played a part in the ouster of three presidents in the last decade by publicly withdrawing its support when street protests erupted.

Larriva, one of the most popular members of the Cabinet, had promised to strengthen presidential control of military ranks, improve salaries for the armed forces and make the promotions system more transparent.

[CNN - January 25, 2007]

Ecuador army chief sacked over errors leading to defense minister’s death

Ecuadorean President Rafael Correa sacked armed forces chief Gen. Pedro Machado on Friday [Feb. 2, 2007], citing security errors which led to a helicopter crash that killed the defense minister and six others in January.

“General Machado has been removed from his post, not so much due to the accident in itself, nor due to speculation over a possible murder, but because of the administrative and security decisions he made ahead of the flight,” said Ricardo Patino, acting defense minister.

Machado, who only took office on Jan. 14, will be replaced by Guillermo Vasconez, head of the joint chiefs of staff.

… Patino said that Ecuador will also launch an official investigation into Col. Rene Vazquez, who was in charge of the exercise.

“Vazquez will have to fulfill the official requirements relating to an investigation of his actions and decisions ahead of the accident,” said Patino.

Patino said President Rafael Correa had appointed Lorena Escudero as the country’s new defense minister. Escudero, a 41-year-old college professor, is to take charge late Friday. She will become the second woman defense minister in Ecuador’s history.

[Xinhua - February 3, 2007]

History of Ecuador - mid to late 20th century

Recession and popular unrest led to a return to populist politics and domestic military interventions in the 1960s, while foreign companies developed oil resources in the Ecuadorian Amazon. In 1972, the construction of the Andean pipeline, which brought oil from the east to the coast was completed, making Ecuador South America’s second largest oil exporter. That same year a “revolutionary and nationalist” military junta overthrew the government, remaining in power until 1979, when elections were held under a new Constitution. Jaime Roldós Aguilera was elected President, and he governed until May 24, 1981, when he died in a plane crash. By 1982, the government of Osvaldo Hurtado faced an economic crisis, characterized by high inflation, budget deficits, a falling currency, mounting debt service, and uncompetitive industries, leading to chronic government instability.

Many years of mismanagement, starting with the mishandling of the country’s debt during the 1970s military regime, had left the country essentially ungovernable. By the mid 1990s, the government of Ecuador has been characterized by a weak executive branch that struggles to appease the ruling classes, represented in the legislative and judiciary. The last three democratically elected presidents have failed to finish their terms during the period 1996-2006.

[Wikipedia]

Jaime Roldós Aguilera

Jaime Roldós Aguilera (b. November 5, 1940 in Guayaquil, Ecuador - d. May 24, 1981) was President of Ecuador from 10 August 1979 to 24 May 1981. He was a reformer, and was threatened more than once by personal enemies. Roldos and his wife founded the People, Change and Democracy Party or Partido Pueblo, Cambio y Democracia in Spanish. He was President during a brief military encounter with Peru in 1981. He died in an airplane crash later in 1981 when his Air Force plane (variously identified as either a Beechcraft King Air or an Avro turboprop) crashed in heavy rain near the Peruvian border. All eight other passengers and crew died as well.

Many Ecuadorians claimed that Roldós’ death was actually an assassination carried out by the United States. American businessman John Perkins alleges in his book Confessions of an Economic Hit Man that Roldós was assassinated by a bomb located in a tape recorder in order to serve American interests in Ecuadorian oil prospects (Perkins originally claimed Roldós died in a helicopter crash; this has since been corrected). Roldós died just months before Panamanian head-of-state Omar Torrijos also died in a plane crash. Other Ecuadorians believed that Roldós had been killed by the Peruvian government.

[Wikipedia]

Sat 10 Feb 2007: Permalink