Ecuador’s XI Oil Round: A New Threat to the Amazon

The Ecuadorian government has begun an auction of 16 new oil blocks in the southern Amazon in what is being called the XI Oil Round. These blocks threaten the best-protected tract of primary rainforest remaining in Ecuador and over seven indigenous nationalities that call this forest home.

The XI Oil Round is an auction of oil blocks in Ecuador's southern Amazon region initiated by the Ecuadorian government in November of 2012. Companies from around the world will bid for licenses to operate in areas where oil reserves are believed to exist. Of the original 21 oil blocks up for grabs, 3 will go directly to the state-run oil company, Petroamazonas, and 5 have been suspended from the auction until 2013, leaving 13 blocks open for the current round. Indigenous resistance has postponed the auction of 5 blocks, four of which lie in Achuar territory, and one—block 74—which encompasses the territory of the Kichwa people of Sarayaku. Companies that have expressed interest include the Spanish company Repsol, the Italian companies Agip and ENI, Andes & Sinopec of China, and the state oil companies of Peru, Colombia, Mexico, Chile, Turkey, Vietnam, Belarus, and Indonesia, among others; although the Ecuadorian government has expressed the belief that the most likely bidders will all be Chinese companies. After the licensing round, companies will have until July to prepare their offers. The originally deadline of May has been extended, most likely due to a lack of interest expressed by companies given the social, economic, and legal risks associated with these blocks. Companies that earn licenses must invest between $1 billion and $1.2 billion in the oil blocks. The Ecuadorian government will sign contracts around September of 2013. Contracts allow an exploratory period of four years, extendible by two, and a period of extraction of twenty years, extendible by another five years.

A Fragile Ecosystem

The 16 oil blocks in the southern Ecuadorian Amazon cover over 8 million acres of primary rainforest previously untouched by oil exploration. Five oil blocks of the original 21 were suspended from the round due to local indigenous opposition and international pressure; however, the five blocks will most likely be auctioned off in 2014. The region is Ecuador’s last remaining tract of virgin rainforest and is considered the best-preserved part of the Amazon. Studies show that 85% of the area slated for inclusion in the XI Round is intact, primary forest. The area is a biodiversity hotspot within Ecuador, a country with one of the highest rates of biodiversity in the world. The most recent scientific studies have this to be the most biologically diverse region in the entire Western Hemisphere, an area of utmost importance for the world’s freshwater supply and for reduction of carbon dioxide in the atmosphere.

Affected Peoples

The southern Amazon region includes over 2 million hectares of ancestral territory pertaining to six indigenous nationalities—the Shuar, Achuar, Kichwa, Shiwiar, Andoa, and Sápara—who rely on the rainforest and its rivers for hunting, fishing, agriculture, and drinking water. Their dependence on this natural environment for survival puts them at even greater risk should oil companies begin to search for crude. The many non-indigenous peasant farmers that call this region home would also be affected by oil activity, as they rely on clean water and soil to grow crops for their livelihoods.

Projected Impact of the XI Round

Opening up this region to oil extraction would result in irreversible ecological and cultural devastation to the region and to the planet. Initial studies on the environmental impact of oil exploration find that the construction of roads alone would result in the loss of 457,700 acres of tropical forest and would release 136.4 million tons of CO2 into the atmosphere within the first 20 years. The cost of damage from emissions would be over $682 million. This does not take into consideration future impact on the region's water supply, human health, and biodiversity.

Furthermore, as the history of oil extraction in the Amazon demonstrates, opening up this sensitive region to oil development would likely result in cultural genocide and the disappearance of more than one indigenous group. Of the seven indigenous nationalities affected by this oil round, two are already in jeopardy, including the Sápara, whose territory falls entirely within the oil blocks. The oral heritage and cultural manifestations of the Sápara have been recognized by UNESCO as a non-material world patrimony. The rainforest represents an integral part of the spiritual beliefs of these people and is vital to the transmission of knowledge through medicinal plants and oral stories. As the forest disappears so would these unique and ancient cultures.

Indigenous Resistance

Indigenous communities in the region have a long and successful history of resisting oil operations in their territories. Plans to auction these blocks in 2002 were scrapped due to indigenous protests. The Kichwa of Sarayaku have refused to permit oil exploration on their land. Their strength of organization and media-savvy protest strategy has resulted in several recent and groundbreaking victories. In 2012 they won two high-profile court cases. The government of Ecuador acknowledged responsibility for illegally licensing an oil company to do business on their territory without the community's consent, and the Inter-American Court of Human Rights (IACHR) ruled that indigenous communities must be consulted prior to such enterprises and that the government must pay for damages to the community.

Indigenous leaders and organizations representing seven indigenous nationalities, including the Confederation of Indigenous Nationalities of Ecuador (CONAIE) and the Confederation of Amazonian Indigenous Nationalities (CONFENIAE), oppose the XI Round for the threat it represents to their territories and way of life. Leaders from the six nationalities that inhabit the region have launched a grassroots effort, dubbed the Campaña Kaprik, to stop this violation of their right to exercise control over the use of their legally titled ancestral lands. They have declared their territories “no-go zones” for extractive industry, including oil, gas, mining and logging.

Indigenous leaders claim they were not properly consulted about the oil round, a right granted by the Ecuadorian constitution and international legislation. They reject government claims that a consultation process was implemented, saying the process did not include indigenous participation and was not in accordance with traditional decision making practices nor carried out in native languages.

A demonstration by hundreds of indigenous protesters outside the hotel where the XI Round was kicked off confirms that communities will remain firm in their resistance to the oil round.

Not Worth the Risk

Ecuador's oil reserves are limited. It is estimated that the country has no more than twenty years of oil exports left. Oil reserves in the southern Ecuadorian Amazon are only likely to prolong exportation by another two years, and the probability of discovering large reserves is very low. Ecuador's oil minister has stated that only one in three exploratory wells is likely to find oil. Nearby pipelines in northern Peru transport less than a third of crude they were designed for, pointing to an unfavorable outlook in southern Ecuador. The amount of money that companies will have to invest in these blocks is unlikely to be exceeded by profits, especially when considering the history of successful indigenous resistance in the region that has forced companies such as Burlington Resources, ARCO, ConocoPhillips, Perenco, and CGC to abandon drilling plans. Ecuador has had to compensate companies with previous rights to the blocks but which have been unable to move forward due to resistance by local communities, paying millions of dollars in indemnification to firms whose operations were paralyzed in force majuere for close to a decade. A similar oil licensing round in 1997 failed to attract bids.

Recent court rulings from cases in the region uphold indigenous communities' rights to free determination over the use of their lands. Unified opposition to the licensing round and the claim made by indigenous leaders that communities were not properly consulted heightens the risk for future court cases against companies and the Ecuadorian government.

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