Pipeline Through Paradise | Amazon Watch
Amazon Watch

Pipeline Through Paradise

September 25, 2001 | Jim Wyss | LatinTrade

Hernan Lara cut his teeth building an 830-kilometer oil pipeline through the war-torn terrain of his native Colombia.

After that security nightmare, he expected any other job would seem like a dream – especially in Ecuador, with its reputation as a regional safe-haven. As the president of OCP Ecuador, an international consortium that recently began construction on an underground pipeline to transport heavy crude, Lara believed the economic magnitude of the US$1.1-billion project would woo the 12.5 million inhabitants of this impoverished Andean nation. “I thought this was a technical decision; that if we did the job we had to do, that would be enough,” says Lara in a newly remodeled fourth-floor office in Quito’s financial district. “But we were wrong.”

In recent months, an anti-pipeline movement has taken root in the picturesque town of Mindo, an eco-tourism destination 22 miles northeast of Quito. OCP’s environmental study convinced government authorities that the pipeline had to pass through a stretch of rare Andean cloud forest near Mindo in order to avoid seismic risks and populated areas. But many of the town’s 2,500 residents balked.

“If the government says it needs revenue from the pipeline, that’s fine,” says Milton Narvaez, a Mindo resident who heads anti-pipeline group Accisn por la Vida. “But building it through Mindo is short-sighted and doesn’t recognize the potential for eco-tourism here.”

Lying on the western slopes of the Pichincha volcano, Mindo is one of the hemisphere’s top bird-watching destinations, drawing 50,000 tourists a year. The Audubon Society recorded 350 species in the area within a 24-hour period – more than anywhere else in the world. Experts say 10 of the area’s bird species are endangered and 45 others are vulnerable.

The area also boasts 275 types of orchids, an array of butterflies and other rare plants and animals. Adding an oil pipeline to the mix sets the stage for an environmental disaster, not to mention a possible end to the cloud forest and eco-tourism, according to Mindo residents and international conservation groups.

Who’s who. The OCP consortium is made up of oil powerhouses: Occidental Petroleum and Kerr-McGee of the United States, Canada’s Alberta Energy, Spain’s Repsol YPF and Argentine companies Perez Companc and Techint. These companies’ decades of experience and thousands of kilometers of pipeline construction have done little to stave off attacks by nature groups trying to rally public opposition to the project.

OCP has countered the movement with an advertising campaign on radio and television. “We had to tell people that the pipeline was not going to come crashing down on them, and that the pipeline was buried and not on the surface as they had been told,” says Lara. While the battle for the public’s hearts and minds unfolds, OCP continues work on the pipeline through Mindo. Most analysts say that once the pipeline begins operations, it will radically change the face of this economically crippled country. Petroleum is Ecuador’s leading commodity, and last year crude oil accounted for 15% of the gross domestic product. “This is the most important economic project since 1972,” says Gustavo Arteta, director of the Cordes economic think tank in Quito.

Three decades ago, Ecuador finished the 410,000-barrel-a-day Trans-Ecuadoran pipeline (SOTE), which has been plagued by breakdowns. Successive governments have been struggling for years to get a new conduit built.

The OCP pipeline, which will run from the oil-rich Amazon region over the Andes to the Pacific port of Esmeraldas, will generate about 55,000 short- and medium-term jobs during its 25-month construction period. It is expected to decrease the unemployment rate by 1.5%, generate $350-million a year in tax revenues and boost the annual GDP by about 2.5% during its first years of operation, according to Arteta.

Most important, the 518,000-barrel-a-day pipeline will allow Ecuador to double its volume and catapult oil into the nation’s export leader. Oil is currently neck-and-neck with bananas as the country’s top earner.

“This project is absolutely vital to the oil sector,” explains Christian Davalos, the head of the Association of Petroleum Producers (Asopec). “In past years, there hasn’t been investment in oil fields because there hasn’t been a way of getting the product out.”

He says private operators will pump some $3 billion into future exploration and production. Mindo residents may threaten to chain themselves to trees at construction sites, but Lara predicts the OCP will win over a skeptical public as soon as cash starts pouring into government coffers.

“Ecuadorans are avidly suspicious of the private sector and the government,” says Lara. “It has been hard to win their trust because we are a new company without any results to show. But we are convinced that by the end of this process, we will be a company that makes Ecuador proud.”

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