Almeida & Brouwer: Oil in the Ecuadorian Amazon; an update.


The Ecuadorian oil industry is located in the Amazonian provinces of Orellana and Sucumbios, which are home to 30% of the world’s biodiversity .Ten identified Indigenous civilizations, approximately 125,000 people, are the ancestral inhabitants of the region- Achuar, Ai´Cofan, Huaorani, Quichua, Secoya, Shiwar, Shuar, Siona, Taromenani and Zaparo. Their culture, economy and welfare are synonymous with the protection and integrity of their ancestral lands.


Empirical evidence collected in the field since 1985 suggests that the Ecuadorian Amazon continues to be the worst oil induced environmental and social disaster in history. In 2010, 600 million gallons of crude were spilled into the headwaters of the Amazon River basin. Everyday over 4 million gallons of toxic wastes and 2,100-4,200 gallons of crude per separating station, are dumped, untreated, into the watershed.
The Indigenous communities bear the brunt of this contamination that seeps through their habitat, silently as a cancer growth. The 90% mortality rates registered in the Cofan, Secoya and Siona communities in-between 1960 to 2010, are a tragic reminder of this ongoing process.

The expansion of oil in the Amazon also brought with it a semi-spontaneous process of agrarian colonisation, which jointly with the oil concessions qualitatively altered the migration patterns that the indigenous hunter and gatherer economy required. The transition from a natural to a market economy has been synonymous with extreme poverty. The monthly incomes of extended families over the past 12 months, have averaged between $19-$30 per month; well below the World Bank’s poverty indicators. Paradoxically, the ability of these families in satisfying their basic needs depends increasingly on cash incomes, and this tendency is growing almost proportionally to the 5% annual rate of deforestation.
This dismal reality is further enhanced by the presence of drug cartels, FARC, Colombian Para-military organizations, the refugee crisis, et. al, and according to human rights sources, the region has become one of the five most conflictive boarder – frontiers in the world. . To put it blatantly: empirical reality could give sustenance to the opinion that: “ Over the last half century, oil in the Ecuadorian Amazon Rainforest has induced a developmental form of ethnic cleansing and genocide of Ancestral Indigenous Civilizations.”


We can testify to the fact that the then AP Presidential candidate Correa, negotiated the political support of Amazon Communities by promising to 1) protect the Amazon environment from oil and mining; 2) guarantee indigenous rights to ancestral lands; and 3) respect the intangible status of indigenous and national reserves.
Within this context, a very significant proportion of the Amazon Nationalities have started to question the track record of Correa’s campaign promises, particularly the government’s oil policy.
According to Shuar, Siona and Cofan leadership, the mere fact that the primary sector of the Ecuadorian economy has failed to renew basic oil technology since 1964, particularly in the fields of seismic studies, drilling and toxic waste disposal, speaks for itself, and enables both the government and the state to be qualified and categorized.
In their opinion, the policy of the Correa government to increase productivity by intensifying, rather than modernizing, an antiquated and environmentally disastrous production process violates the basic Human Rights of the Amazon Nationalities; as guaranteed under the Constitution, and ratified in innumerable Declarations and Conventions governed under international law. Furthermore it also contradicts the national and international standards and norms that supposedly regulate the oil industry per se; norms and regulations accepted as standard production procedure by both insurance companies and the large majority of petroleum multinationals.
For the Amazon Nationalities the Correa oil policy is confusing. Over the past four years Petro Ecuador has failed dismally in protecting the environment from oil contamination and has been technologically incapable to successfully exploit the existing mature wells, not to mention the significant reserves of Auca and Shushufindi. The PVDSA-Petro Ecuador Rio Napo endeavour to open more wells in less time to ensure present production levels, has not been successful. Sacha is producing almost 50 thousand barrels less a day than a year ago, and the Consortium has been unable to recuperate the existing reserves in mature wells for precisely the same reasons Texaco closed them; technological restrictions and geological specificity.
Consequently the lack of technological investment in the oil sector is seriously damaging the environment and is limiting production in all spheres of the industry. This should be common knowledge and it is rather curious that the government has shown no signs of taking advantage of high oil prices to invest in the technology that the industry, the environment and the Amazon Nationalities, so crucially require.
Evidently technological investments leading to increased productivity tends to bolster balance of payments and public finances, but Correa has preferred to sell oil reserves to accomplish this goal.
The government is presently evaluating bids for Petro-Ecuador’s principal 5 mature wells; these include Libertador and Cuyabeno. Correa expects that potential investors would simultaneously reverse the present decline in productivity and increase production by incorporating new reserves. Incredibly, the terms of bidding stipulated by the government, especially in the field of productive investments and exploration, are almost a carbon copy of the Rio Napo fiasco. To-date, and not surprisingly, petroleum companies have not answered the call. The only bidders are the service companies that have traditionally worked with Petro-Ecuador: Baker Hughes, Halliburton and Schlumberger in particular.
Within this context, the expansion of a pseudo nationalised oil industry in the Amazon acquires a new dimension altogether. Government plans to exploit ITT, block 31 and the southern Amazon region, can only be rationally considered from an economic and financial perspective, after the critical problems evident in the existing and easily available reserves are resolved. The bottom line is that technological innovation in the Ecuadorian oil sector is an imperative prerequisite for extracting present and future reserves.
Clearly Government policy in the petroleum sector has not been conducive to the technological investment Ecuadorian petroleum requires to minimally ensure even present day production levels. High oil prices on the international market may have blinded Correa to the ever more apparent and critical state of the oil industry and its obsolete technology. With China now controlling 30% of oil in the non state sector and purchasing over 50% of total crude oil exports, apart from the 2 billion dollar loan which is to be repaid in oil, it is possible that Correa will turn to Beijing for help in resolving the present and future issues of oil development in the Amazon. If the example of ANDES petroleum were anything to go by, then the environment and the Amazon would not benefit from China controlling the oil industry.
Whatever direction oil policy may finally take under the Correa government, its success necessarily depends on a coherent political, social and environment programme for the Amazon Indigenous communities.
To date the relationship of the government and the communities has been as confusing as their oil policy. On the one hand, the government has publicly praised the virtues of the Chevron-Texaco verdict. In so doing the government also has recognized the environmental and human costs implicit in Texaco’s operating methods, which according to the judge in Lago Agrio exceed $ 9 billion.
On the other hand, the government is intensifying oil production in a technical manner that is almost identical to the Texaco era. This blatant contradiction is the principal cause for the radically deteriorating relationship between the Amazon indigenous communities and the government; as the recent case of Shuar leader Pepe Acacho could illustrate. This policy also renders the state defenceless in the pending law suits against Petro-Ecuador for their role in the 1993-2011 post Texaco era-; it should be pointed out that the government only agreed to support legal actions against Chevron-Texaco on the condition that Petro-Ecuador be excluded from liabilities prior to 1993.
How can we explain this problematic?
We would suggest that the answer lies in the highly extractive model that President Correa is consolidating in the primary sector of the economy. Throughout history primarily extractive economies have not been characterized by a sense of accumulation, or by their ability of investing state revenues in productive capital. This trait is evident in the Ecuadorian oil sector.
Unfortunately History also shows that democracy and human rights are not necessarily synonymous with highly extractive economic models. CONAIE is particularly concerned with the increasingly authoritarian posture of the government.


~ by FSVSF Admin on 25 April, 2011.

One Response to “Almeida & Brouwer: Oil in the Ecuadorian Amazon; an update.”

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