Quito – Ecuador has warned it faces an ‘economic emergency’ after halting crude exports because of violent protests in two oil-rich Amazon provinces by workers and locals demanding a bigger share of oil revenues.
Economy Minister Magdalena Barreiro said the government had scrambled to find alternative supplies from Venezuela after its state oil firm, Petroecuador, suspended exports in a move that has sent global oil prices shooting back up.
‘We’re going to see what the reaction is to this economic emergency,’ Barreiro told reporters.
‘We are trying to contact Venezuela to see if they can send oil to us, so we can continue exporting and maintain the most normal situation possible,’ she said.
Ecuadoran President Alfredo Palacio on Thursday announced that Petroecuador had suspended all exports of crude oil because of the protests and ‘sabotage’ against its infrastructure.
He said oil production at Petroecuador’s facilities – 35 of which have been occupied by striking workers and local protestors – had dropped from 210,000 to 30,000 barrels a day by Wednesday, and on Thursday slumped to nothing.
That is costing the country 30 million dollars a day in lost revenues, the president said.
Private companies, largely US oil majors, produce another 300,000 barrels a day. Ecuador is South America’s fifth-largest oil producer and more than half of its exports go to the United States.
There were no figures for the impact of the protest on foreign firms.
Palacio said the strike and protest movement was an ‘act of sabotage against all our people’.
‘Preventing crude oil exports at this time is shattering an economic project that profits social investment,’ he said.
The oil-rich northeastern provinces of Sucumbios and Orellana, home to 150,000 mostly indigenous people, were put under a state of emergency earlier this week. But protestors have defied a dusk-to-dawn curfew.
Clashes between demonstrators, police and military forces have injured at least 60 people, said Sucumbios Governor Guillermo Munoz.
Besides the oil facilities, protestors have occupied airports in Lago Agrio and El Coca, the capitals of Sucumbios and Orellana respectively, and have blockaded major roads in the region.
The protestors, who include government officials and lawmakers, want foreign oil companies to build 200 kilometers (125 miles) of roads in their region and to give more jobs to locals.
They also want the government to renegotiate all its contracts with foreign oil companies to demand a 50 percent share of the profits they make in Ecuador.
In addition, the protestors are demanding US oil giant Occidental Petroleum (Oxy) abandon Ecuador altogether.
The government is debating whether to cancel Oxy’s contract with Petroecuador because of its sale to Canadian firm Encana of some of its oil extracting rights without seeking approval.
Despite appeals to desist from the government, Munoz said the protest was far from over.
‘The strike is going to get tougher,’ he told AFP after a group of protest leaders met late Thursday in defiance of the curfew.
‘The national government wants the talks to take place outside our region, but they must come here and talk with us in Lago Agrio or El Coca,’ Munoz said.
The government insists it will negotiate only once the protestors stand down.
The crisis in Ecuador has sent shockwaves through the oil market, according to Dariusz Kowalczyk, a Hong Kong-based investment strategist at CFC Seymour Securities.
‘The market is concerned about short supplies and even 200,000 barrels is able to make people nervous,’ he said.
