Challenging Emerging Threats in Ecuador

Amazon Oil Expansion in Ecuador's Southern Rainforests

In August 2010, while the Ecuadorian government made strides in advancing the historic Yasuni-ITT proposal to keep three major oil reserves permanently underground beneath Yasuni National Park, news began to leak that President Correa harbors no plans of keeping the rest of the country's oil in the ground. According to reports, the administration plans to offer 11 oil blocks up for bid come April 2011, all of which are in Ecuador's southeastern Amazon. These lands are the ancestral territories of the Kichwa, Achuar, and Shuar, who have fought off previous efforts to sell off their homelands and pledged renewed resistance to any oil projects in their territory.

Back in 2002 the government was set to begin taking offers for a similarly zoned concessions, only to have to reduce the size set for auction from the original 5 million acres down to 1 million after outcry from civil society and outright opposition from indigenous inhabitants of the area opposed to the auctioning off of their lands to the highest bidder. Eight years later, the dynamics in Ecuador's oil patch have changed dramatically. A second Amazon-Andean heavy crude pipeline was completed in 2003 increasing export capacity, and Ecuador rejoined OPEC in 2007 after a 15-year hiatus with high hopes of upping output. A new oil law enacted in July 2010 that improved contract terms for the government has rattled northern investors, giving state-run Petroecuador a larger role and limiting foreign companies to service contracts. Many US firms have left Ecuador, with major players now including state run oil companies like China's Sinopec, CNPC, and Petrochina, Brazil's Petrobras, Venezuela's PDVSA, and with neighboring country firms like Ecopetrol from Colombia and PetroPeru interesting in signing deals. Other "independents" like Canada's Ivanhoe Energy with no downstream retail, combined with a laundry list of joint ventures, subsidiaries and subcontractors, form a dangerous labyrinth of corporate unaccountability.

This proposed oil block auction is the single greatest threat to Ecuador's remaining wild rainforests and intact indigenous lands. Currently, more than half of Ecuador's Amazon is leased in concessions to oil companies. If this massive auction were to indeed go forward, it would leave only small pockets of incongruent rainforest swaths sandwiched between oil blocks.

But if history is any lesson, the Kichwa, Achuar, and Shuar steadfast resistance might just keep the companies and country's drilling plans at bay. The three nationalities not only derailed a government plan in 2003 to attempt to auction off these same oil blocks that Correa has his current sights set upon, they've also impeded drilling attempts in two blocks since 1996. Argentine company CGC is the operator and 50% shareholder in Block 23, which overlaps the territory of Kichwa from Sarayaku, and some Achuar lands. ConocoPhillips is owner and operator of Block 24 that comprises both Shuar and Achuar territory. All have consistently opposed drilling, and to date have thwarted any attempts by the companies to move forward. Their resistance is an inspiring story of cultural defense of indigenous lands and rights, and a telling tale for prospective oil companies and future government plans to drill in the area.

The Kichwa of Sarayaku

History:

Residing in the central Ecuadorian Amazon, the Sarayaku community of about 2,000 indigenous Kichwa people has had one of the most successful histories of defending their territory from resource extraction. Like most of the Amazon, their land has been divvied up into oil concession blocks. Block 23 overlays their territory, and was granted to Argentine company CGC in 1996. CGC has remained the operator of the block with a 50% share, while its business partners in the block have come and gone due to the concession's on-going controversy. Sarayaku has been adamant in its opposition to oil extraction, but government pressure and aggressive company incursions led to multiple confrontations, with community members being victims of rights abuses. In 2003, the Sarayaku community brought their case before the Inter-American Commission on Human Rights that formally recognized a number of human rights violations that had transpired, including the case of four community leaders who were detained by the Ecuadorian military and tortured at a CGC oil facility by the military and police. The Commission issued precautionary measures to the Ecuadorian government for the removal of a critical river blockade and the cleanup of widespread explosives left by the company after its failed attempt to carry out seismic testing. In an attempt to intimidate the community through brute force, several members were violently attacked in route to peacefully protest, but their voices would not be silenced and the protest continued. In light of continued abuses, representatives of the Sarayaku successfully petitioned the Inter-American Court on Human Rights to issue provisional measures to the Ecuadorian government in 2004. Currently, CGC continues to hold a 50% share in the block along with ConocoPhillips. Both companies are in talks with the government to terminate its contracts and return the concessions.

Current Situation:

Amazon Watch has been a longtime supporter of the efforts of the Sarayaku community in the central Ecuadorian Amazon to prevent oil development on their ancestral lands. In a testament to the strength and resilience of the Kichwa people, Sarayaku has a significant history of success in repeatedly ousting oil companies from the region. Block 23, which overlays a substantial portion of their territory and is now currently owned by ConocoPhillips, has changed hands multiple times in the past decade and a half. They have also garnered the attention and support of the Inter-American Commission and Court on Humans rights, which have both produced precautionary and provisional measures (respectively) to the Ecuadorian government on behalf of the Sarayaku community. Unacceptably, the Correa administration has failed to take the necessary steps to be in compliance with these measures causing representatives of the community to return to Washington, D.C. in the fall of 2009 to once again present their case before the Commission, asking them to impress a sense of urgency upon the Ecuadorian government.

In April 2010, members of the Sarayaku community were again able to evict intruders from their land. A small group, claiming territorial rights to a portion of land legally allotted to Sarayaku, attempted to settle and form a pseudo community they call Kutukachi. Once they were able to establish rights to the land, their intent was to negotiate with the oil company AGIP, which holds the concession overlapping this region (Block 10), to construct a new airstrip. During the evening of the April 29th, a group of men from Sarayaku were violently attacked and severely injured, but invaders were successfully expelled. Amazon Watch remains in close contact with the Sarayaku community and will continue to closely monitor the situation.

The Achuar & Shuar

In southeast Ecuador reaching to the border with Peru lies hundreds of thousands of acres of road-less rainforest belonging to the Achuar and Shuar, two indigenous groups that have also fought off industrial-scale, natural resource extraction and threats to their lands and way of life. These peoples were historically fierce enemies, waging battles over territory, resources, and culture traditions. Numbering some 6,000 and 40,000 respectively, the Achuar and Shuar have now united around the collective threat of oil extraction.

Using physical protests, marches, legal actions, and an international pressure campaign, the Shuar and Achuar were able to keep several oil companies from drilling on their lands, and derail the government's plan to launch a bidding round for a dozen new oil blocks on their lands. But now, after a period of relative silence from the government Conocophillips, it appear the company is seeking to get out and the government setting the stage to re-offer the block as part of the new bidding round.

The History of Block 24

The Atlantic Richfield Corporation (ARCO) received drilling rights for the 200,000-hectare Block 24 concession from the Ecuadorian government in 1998. Block 24 comprises part of the ancestral homeland of the Shuar and Achuar peoples, who call the region Transkutuku after the mountain range that traverses it. Legally recognized indigenous federations known by acronyms, FIPSE and FICSH for the Shuar (now consolidated into one federation, NASHE), and NAE for the Achuar, represent the majority of the region's indigenous peoples. This region is one of the last large tracts of lowland rainforest in Ecuador that is still virtually undisturbed. The Achuar only came into contact with the outside world at the end of the 1960s. They have managed their lands for millennia, combining hunting, fishing and gathering of forest products with traditional cultivation of small clearings. To date only 3% of all Achuar territory has been deforested for their use, and they seek a strategy to maintain this area intact in perpetuity.

The Shuar and Achuar made their opposition well know to ARCO by holding protests and marches, thwarting company employees from entering their territories, and filing a legal injunction aimed at stopping company officials from dividing communities and bribing leaders. ARCO failed to properly consult the federations, in violation of internationally recognized indigenous rights, and in 1999, a provincial judge ordered an injunction preventing attempts by ARCO officials to dialogue with non-authorized members of the indigenous federations. Unable to move forward with oil activities due to the widespread resistance, ARCO sold the block to Houston-based Burlington Resources in 1999.

Beginning in 2000, Burlington pursued an aggressive community relations strategy in hopes of manufacturing consent for the project. Dubbed by the indigenous federations as ‘divide and conquer' tactics, they repeatedly denounced Burlington's controversial approach and called on the company to respect indigenous peoples' rights and halt its divisive activities. The indigenous federation FIPSE again filed a petition to keep Burlington from using the types of tactics that were previously outlawed under ARCO's tenure in the block. The court ruled that the injunction also applied to Burlington once it took over the concession. Despite this, Burlington officials continued to attempt to by-pass the legally recognized federations, in violation of the injunction. In violation of both Ecuadorian and international law, the company repeatedly entered indigenous ancestral lands without prior consultation with recognized tribal authorities while also attempting to manipulate and divide the indigenous residents.

International covenants and widespread recognition of indigenous rights enshrines the right of indigenous peoples to decide their own development as well as the right to 'free, prior and informed consent' for projects that affect their territories and cultures. Despite these legal concerns and the opposition of the majority of indigenous peoples to be affected by the company's operations, Burlington continued to pursue a discredited and unethical strategy with the local indigenous peoples in its efforts to drill for oil.

Indigenous opposition paralyzed any Burlington oil extraction activities throughout the company's ownership of Block 24. In August 2002, Achuar and Shuar federations filed a complaint to Ecuador's Civil Anti-Corruption Commission demanding that the Ecuadorian government terminate Burlington's participation contract for the block. The termination of the contract would prohibit Burlington from entering into any new contract with the Ecuadorian state. Under this contract, the company was obligated to carry out exploration and to develop an exploration plan by May 2002. However, community resistance forced Burlington to declare force majeure and prevented it from fulfilling the terms of the contract. An assessment of the original contract carried out by Ecuadorian armed forces noted that the Burlington contract entitled the Ecuadorian government to only 12.5% of the profits generated by the block—the lowest percentage of any participation contract granted to foreign oil companies by the state. In November 2002, the Commission ruled that Burlington, in waiting 28 months instead of 10 days to declare force majeure, indeed had broken its contractual obligations and called on the Ministry of Energy and Mines to cancel the company's contract.

In light of the ongoing stalemate, the Ecuadorian government threatened to militarize the region in an effort to quell resistance and proceed with oil prospecting. But a civil uprising in 2005 forced out President Lucio Gutierrez, bringing in a new national regime. This, combined with international and shareholder pressure on Burlington spearheaded by Amazon Watch which forced the company to commit to not moving forward with Ecuadorian military assistance, helped relieve immediate pressure on the Shuar and Achuar within Block 24.

In 2005, Burlington resources was bought by ConocoPhillips, who is now the sole owner and operator of Block 24. At a 2007 shareholder meeting, CEO James Mulva, said the company is currently 'reviewing' its plans for the block, but has legally moved forward with plans to leave Ecuador. The government has expressed interest in continuing attempts to open up the area to new drilling if the company leaves.

Block 20 – Drilling for Heavy Crude in the Sacred Valley

High above the tree line in the Andean paramo, the drops of water that will become the Misahualli river gather and join forces, beginning a dramatic decent to the Amazon Basin, carving canyons and shaping the landscape. Declared a ‘Valle Sagrado' by Ecuador's National Institute for Culture and Patrimony, this valley is indeed sacred. No doubt due to its warm climate, abundance of water, and fertile soil, the area has been home to indigenous peoples for thousands of years—some of whose cultural remnants are still seen today on dozens of petro-glyphs that date back to 10,000 years BC. In 2007, the Ecuadorian government gave Canada's Ivanhoe Energy drilling rights to a massive oil block, with the first wells slated for development alongside the Misahualli River in the heart of the Sacred Valley.

On the eastern side of this valley reside thousands of Kichwa indigenous people who still very much depend on the land and rivers for their daily survival. Grouped into seventeen communities are some 2,500 people who hold collective lands rights to thousands of acres of land known as Rucullacta, which means tierra antigua, or ancient land.

Ecuador's state oil company drilled exploratory wells here in the 1970s and found oil, but did not have the technology at the time to extract it. The crude in the underground formations is between 13° and 15° API—extremely heavy crude. According to justifications by Ecuadorian government, it granted the concession to Canada's Ivanhoe Energy due to its patented technology to convert the region's heavy oil into light oil (HTL technology), though many other companies still consider this to be a mining project, similar to the tar sands of western Canada. Given the extreme viscosity of the crude, the extraction process requires massive amounts of water, gas, and heat to suck it out of the rock and get it to flow in a pipeline.

The first well site underway on lands adjacent to Rucullacta, known as IP-15 in Nuevo Esperanza (New Hope), appears riddled with technical problems, though Ivanhoe press releases tout progress and good community relations. Ground reports from local communities, Amazon Watch field staff, and even some workers for Ivanhoe say that the company can't seem to get the tar like sludge out of the hole, is short on capital, and is currently looking for an investment partner.

According to Ivanhoe's press statements, the company has plans for dozens of wells inside Block 20, many which are slated for Rucullacta territory. In the face of this threat, Rucullacta held dozens of workshops and strategic meetings with leaders and allies. At Rucullacta's request, Amazon Watch traveled numerous times to help provide information on the project. Over the course of several months, five assemblies were held on the oil issue, and the community filed an injection to attempt to stop the project from moving forward.

On April 16th 2010, the communities held a massive, extra-ordinary assembly, with more than 1,000 people to come to consensus on their position regarding the oil project. Gathered in a sweltering coliseum and many carrying traditional hunting spears, community after community affirmed its opposition to the oil project. With unity among all of the Rucullacta communities, people took to the streets. Men, women, elders, and kids with signs, spears, and parasols marched some 5 km to the nearest town of Archidona. Walking down the main street, they headed to the Municipal building and the office of the Mayor. A public hearing was hastily arranged, Rucullacta leaders, backed by the President of Ecuador's all powerful national indigenous organization CONAIE and Amazonian confederation CONFENIAE, made their opposition to Ivanhoe, and all other oil, mining, and logging in the area explicit. To an outburst of applause and chants, the Mayor joined them, and publicly declared his opposition to the oil project.

An August 2010 press release from Ivanhoe reports disappointing results from the company's first exploratory well in Nuevo Esperanza and poor preliminary results from a second, which has led to company talk of conducting widespread seismic testing throughout the block. While this is a positive development for communities and shows that Ivanhoe's technology and analysis is questionable at best, it could open up large swaths of the block in search for lighter crude.

IIRSA and the Manta Manaus Corridor

The Initiative for the Integration of Regional Infrastructure in South America (IIRSA) is a throw back to the days of big development schemes and the dreams of southern country governments (and northern lending institutions) for the energy, infrastructure, and communications integration of South America. IIRSA in fact is some 510 projects, a hodge-podge of dams, roads, power plants, waterways, and multi-modal corridors connecting them all.

One of IIRSA's central projects is known as the Manta-Manaus corridor, which is designed to connect the port city of Manta on Ecuador's Pacific coast with Manaus, a bustling river port in western Brazilian, essentially creating a cross-continental alternative to the Panama Canal. The corridor is multi-modal, consisting of a series of projects that include ports, roads, airports, and a waterway.

There are major environmental and indigenous rights concerns about all aspects of the corridor. Short-term right of way (ROW) issues—the effects of actual construction on the place and people—are many, including the attempt to dredge one of the Amazon's most mighty and wild rivers. But it's the project's overall long-term impact that raises the largest concerns. The goal of Manta-Manaus is to improve imports and exports between Asian markets and the Amazon. Opening up a channel into the heart of the Amazon for products to and from China, the world's second largest economy, would only exacerbate existing drivers of rainforest deforestation, and potentially create a more economically convenient transportation option for illegally logging timber, agro-fuels, soy, and spur further oil and gas exploration in some of the Amazon's most remote areas.

While parts of the Manta-Manaus mega-project are underway, such as roads between Manta and the Andes, and a new airport in Tena, the major linchpin of the project is the Napo River between the Amazonian town of Coca and northern Peru. The Napo is the northern border of Ecuador's heralded Yasuni National Park, and is an untamed, powerful river whose banks and route dramatically change throughout the year. In order to make the river navigable for large barges and containers ships moving heavy machinery and products, the Napo would have to be dredged, something Ecuador's military oceanographic institute says is impossible year round. The river may be navigable with dredging at best three months per year, calling into question much of the economic justification for the project. Other questions remain as to whether the route will indeed be shorter, and more cost effective, than the Panama Canal. Some experts are calling this the latest Latin America boondoggle, as the ‘if you build it, they will come' mentality of the banks and governments has little concrete evidence to back the project's touted benefits to the region.

IIRSA and the Manta-Manaus have become tainted words throughout the Amazon, as indigenous groups like COICA and others denounce the projects as threats to their territories. In Ecuador, the Kichwa federation representing many who live along the Napo River, have declared outright opposition to the project and have refused to participate in an IDB-funded pre-feasibility study examining the social and environmental elements of increased commercial integration between Ecuador and Peru, including a preliminary analysis of the river's navigability. Though the IDB claims the study has nothing to do with Manta-Manaus and IIRSA and is merely a result of the 2001 peace accords signed between both countries, the study will obviously have major implications for the corridor, and can clearly be considered the first phase of the project.

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