Saturday, August 20, 2005

Ecuador soldiers retake some oil wells

Miami Herald - Soldiers regained control of a number of oil wells in Ecuador's northeastern Amazon region on Friday after six days of protests brought oil production to a halt and prompted the government to declare a state of emergency.

Television broadcast live images Friday of police and soldiers using tear gas to repel protesters hurling stones at them in Lago Agrio, 110 miles northeast of Quito.

Residents of the Sucumbíos and Orellana provinces took over two airports on Sunday, demanding a greater share of the oil wealth for the region. On Monday, the protesters started blocking roads, overrunning oil camps and sabotaging oil facilities.

Clashes between demonstrators and security forces have left at least 60 injured, Sucumbíos Gov. Guillermo Muñoz told Agence France-Presse.

President Alfredo Palacio declared a state of emergency Wednesday to stem the protests, sending some 3,000 police and soldiers into the zone. They moved forcefully Thursday to retake control of oil facilities, roads, airports and government buildings.

State-run oil company Petroecuador said it had been able to recover some of its output after the military regained control of some of its oil wells on Friday. But Energy Minister Iván Rodríguez warned that the recovery of about 30,000 barrels of crude could hardly make up for Ecuador's lost daily output of 201,000 barrels.

The economic impact is ''worse than any war,'' Rodríguez said. According to Palacio, the crisis is costing the country $30 million a day in lost revenues.

Backed by regional officials, the demonstrators demand that oil companies hire more locals, provide greater investment in roads and public works in the zone and make income tax and royalty payments directly into local government coffers.

''The strikes are going to intensify,'' Anita Rivas, mayor of Orellana's capital, told EFE Friday. ''If they want to put us in prison, then they'll have to put all of us in prison; if they want to kill us, then they'll have to kill all of us. That's the rebellion [we've declared],'' she said.

A Petroecuador executive told Dow Jones Newswires on Friday that early in the morning soldiers in Sucumbíos had regained control of about 20 of the 80 wells in the Libertador oil field.

But ''the situation is far from under control,'' the official said.

Ecuador will ask Venezuela to lend it crude oil so it can meet export commitments

Ecuador's defense minister has resigned during protests which have crippled oil production and forced the country to ask Venezuela for a loan of crude oil so it can keep up exports, officials said.

Ecuador will seek a $400 million emergency loan from the Latin American Reserve Fund to avoid balance of payments problems resulting from the protest in two provinces and import $140 million worth of fuel, Economy Minister Magdalena Barreiro said.

The protests pushed US crude oil futures up $2 above $65 a barrel in New York on Friday.

Ecuador is South America's fifth largest producer of crude oil and, after Venezuela, is the second-largest South American supplier of oil to the United States.

Defense Minister Solon Espinoza resigned at the request of President Alfredo Palacio for his handling of the worst crisis since Palacio took office in April, officials at the president's office said.

Palacio blamed Espinoza for allowing protests to get out of hand and named a popular retired army general, Osvaldo Jarrin, in his place, they said.

The government declared a state of emergency on Wednesday and ordered troops to restore order in Sucumbios and Orellana provinces where protesters began to invade oil camps, sabotage equipment and block highways on Monday.

Oil output at state-owned Petroecuador, which has fallen to zero from its usual 201,000 barrels per day, will only return to normal in November, Economy Minister Magdalena Barreiro told reporters.

Most of Petroecuador's exports go the United States. The company suspended its exports on Thursday, declaring force majeure - a contractual clause invoked in case of events beyond the company's control.

Ecuador will ask Venezuela to lend it crude oil so it can meet export commitments, Barreiro said.

"We need the crude loan for us to be able to export and partly normalize our exports," Barreiro said.

She did not say how much oil Ecuador wanted but said Foreign Minister Antonio Parra would present the request to Venezuelan President Hugo Chavez at a meeting in Cuba on Friday.