QUITO – Ecuador said on Tuesday it will not allow oil drilling in a pristine Amazon jungle area inhabited by unique tropical species and Indian tribes hidden from the outside world.
The move could hurt the operations of China’s Andes Petroleum (0857.HK: Quote, Profile, Research), Spain’s Repsol (REP.MC: Quote, Profile, Research) and Brazil’s Petrobras (PETR4.SA: Quote, Profile, Research) who manage oil fields partially inside the area.
“We are not going to allow oil exploitation in this area because there are international treaties that protect these tribes,” Oil Minister Galo Chiriboga told reporters.
Leftist President Rafael Correa has recently turned up the heat on foreign oil firms by grabbing nearly all extra oil revenues generated by the companies above a benchmark price and pushing for the renegotiation of their contracts.
But government officials said companies could consider asking the government for compensation for not extracting oil out of the 700,000-hectare (1.7 million acres) area home to species ranging from endangered white-bellied spider monkeys to rare jaguars.
Repsol produces around 65,000 barrels of oil per day in South America’s No 5 oil producer, while Andes Petroleum’s daily output borders 60,000 barrels.
The protected area is inside the Yasuni rain forest, which Ecuador has offered to protect from oil drilling in exchange for cash compensation from the international community. The Yasuni holds the country’s largest oil reserve of around 1 billion barrels.
