from Weekly News Update on the Americas

Some 5,000 people marched in Quito on May 9 to demand that the government cancel its contract with the US oil company Occidental Petroleum (Oxy) within 15 days, and end all negotiations on the Andean Free Trade Agreement which the US is promoting with Ecuador, Colombia and Peru. Most of the marchers came from Ecuador’s Amazon region and were also demanding approval of a law that would increase oil revenues to the six Amazon provinces by $0.50 per barrel. A group of about 100 protesters broke through police lines at the Carondelet presidential palace and tried to sing the national anthem in front of Independence Monument. But 300 riot police agents attacked the group, shoving journalists and spraying several protesters with some kind of colored liquid tear gas. (El Diario- La Prensa, NY, May 10 from EFE; Altercom, May 9)

On May 10, Eduardo Delgado of the Common People Movement and Luis Macas of the Confederation of Indigenous Nationalities of Ecuador (CONAIE) filed a lawsuit against Energy Minister Ivan Rodriguez Ramos for illegitimate omission of public authority for having failed to cancel Oxy’s contract. (Altercom, May 10)

According to Britain’s Financial Times, Petroecuador, the state oil company, sought to revoke Oxy’s operating contract because the US company improperly transferred a 40% interest in its fields to EnCana of Canada in 2000. In March of this year, the Ecuadoran government rebuffed Oxy’s offer to settle for a package worth more than $1 billion in back taxes, social programs, investments and extra revenues in return for a seven-year extension in its operating contract. Occidental is now thought to have upped the offer to $1.7 billion. On May 8, Energy Ministry Rodriguez gave Petroecuador until May 22 to negotiate an agreement. (FT, May 10)

On Sept. 13 of last year, EnCana announced it had reached an agreement to sell all of its interests in Ecuador for approximately $1.42 billion. (EnCana News Release, Oct. 26, 2005)

Government negotiator Manuel Chiriboga said on May 13 that Ecuador’s talks with the US government over the Andean Free Trade Agreement (AFTA, or TLC in Spanish)—suspended at the end of March—were unlikely to resume. Uncertainty over the legal battle with Oxy and attempts to reform Ecuador’s hydrocarbons law have been stumbling blocks in the negotiations, said Chiriboga. Chiriboga also said the US has engaged in sneaky tricks; in the case of Colombia, the final text of the treaty differed from what Colombian negotiators had agreed on. (Prensa Latina, May 13)

From Weekly News Update on the Americas, May 14

On May 15, Energy Minister Rodriguez announced that Petroecuador was canceling its contract Oxy. The decision to cancel the contract–and reject an offer from Oxy to settle the case—was based on the fact that Oxy had violated the terms of its contract by transferring 40% of its shares in Block 15 in the Ecuadoran Amazon to EnCana on Nov. 1, 2000. Cancellation of the contract means Oxy must immediately return to Petroecuador all the areas under its control, as well as hand over without cost and in good condition all equipment, machinery, installations and transportation etc. used in its oil operations in Ecuador.

Humberto Cholango, leader of Confederation of the Peoples of Kichua Nationality of Ecuador (ECUARUNARI) called the decision a triumph of the indigenous and social movements. The next step is the nationalization of Ecuador’s oil, said Cholango. Before Oxy leaves Ecuador, the company should be investigated for environmental damages in the regions where it operated, warned Esperanza Martinez of the grassroots environmental group Accion Ecologica.

The US Embassy was said to be pressuring hard behind the scenes for a settlement that would allow Oxy to stay; the cancellation of Oxy’s contract is expected to further chill negotiations between Ecuador and the US over the Andean Free Trade Treaty, stalled since March. Rejection of the trade pact is another major demand of Ecuador’s grassroots movements. (Servicio Informativo “Alai-amlatina,” May 16) In a statement on May 16, the Office of the US Trade Representative (USTR) said it was “very disappointed with Ecuador’s decision” to cancel Oxy’s contract. USTR spokesperson Neena Moorjani told CNN: “At this time we don’t foresee new conversations” with Ecuador over the trade pact. Moorjani said the administration of US president George W. Bush would ask Ecuadoran president Alfredo Palacio for “immediate explanations” and details about how Oxy would be compensated. (El Barlovento, Mexico, May 16, quotes retranslated from Spanish)

On May 18, Petroecuador assumed 100% control of Oxy’s oil fields in Ecuador. Oxy reported the previous night that it had transferred all its Block 15 operations to Petroecuador, and that on May 18 a technical unit would take over operations of the Limoncocha wells in Sucumbios province. Oxy has meanwhile filed an international trade suit against the Ecuadoran government with the World Bank’s International Center for Settlement of Investment Disputes in Washington. (El Barlovento, May 18)

From Weekly News Update on the Americas, May 21


Weekly News Update on the Americas

See also WW4 REPORT #121

“Ecuador Boots Oxy,” May 24


Reprinted by WORLD WAR 4 REPORT, June 1, 2006
Reprinting permissible with attribution