Tuesday, August 23, 2005

Ecuador protesters are optimistic over oil deal

Reuters Business Channel | Reuters.com

By Hugh Bronstein

QUITO, Ecuador (Reuters) - Protesters whose attacks have choked off Ecuador's oil exports held out hopes on Tuesday for reaching a deal under which energy companies would invest more in the poor Amazon communities where they drill.

But sticking points remained in the talks among protesters, the government and oil firms -- such as the amount of tax revenue that will go toward development projects in communities surrounding Ecuador's oil fields.

"We are cautiously optimistic that the dialogue will advance, allowing us to arrive at an agreement," Maximo Abad, mayor of the eastern oil town of Lago Agrio and one of the organizers of the attacks, said.

Last week, protesters crippled the country's oil industry and helped jack up petroleum prices by dynamiting pipelines and vandalizing pumping equipment at installations of state oil firm Petroecuador in the eastern part of the country.

The protesters, led by elected officials in communities surrounding Ecuador's oil fields, say they do not benefit enough from the country's oil wealth.

Petroleum exports from Ecuador, South America's biggest supplier to the United States after Venezuela, are still paralyzed. Oil prices on Tuesday briefly reached above $66 per barrel on supply worries exacerbated by the Ecuador crisis.

Abad and about 60 other protest leaders in Quito for talks want companies like Occidental Petroleum Corp. (OXY.N: Quote, Profile, Research), Petrobras (PETR4.SA: Quote, Profile, Research)(PBR.N: Quote, Profile, Research) and EnCana Corp. (ECA.TO: Quote, Profile, Research) to help build roads, provide more jobs and clean up environmental damage.

The activists want 25 percent of income taxes paid by the companies to be funneled toward local development.

"That is our nonnegotiable position," Guillermo Munoz, prefect of the Amazon province of Sucumbios, told reporters.

The government is arguing for a smaller percentage to be steered toward the communities.

Protesters are also calling for the companies to help pave new highways in Sucumbios and neighboring Orellana provinces.

The activists accused President Alfredo Palacio, appointed in April after Congress fired President Lucio Gutierrez for meddling with the Supreme Court, of not backing them in their negotiations with the oil companies.

"The government is not defending the people in the provinces," Guadalupe Llori, the elected prefect of Orellana, told local television. "Neither this government nor previous ones have helped us negotiate with the companies."

Three Ecuadorean presidents have been toppled amid popular unrest since 1997.

Output by state oil firm Petroecuador totaled 90,502 barrels on Monday, up from Saturday's 33,167 barrels but well under the 201,000 barrels per day level before the attacks began.

Private companies operating in Ecuador reported output of 272,559 barrels on Monday, compared to an average 329,000 bpd before the crisis.

Ecuadorean Energy Minister Ivan Rodriguez said on Monday that some oil wells may have been permanently damaged and unable to return to normal activity.

Ecuadorean officials were in Venezuela on Tuesday discussing a cost-free loan of oil to help the country cover exports, a move aimed at muting the economic impact of the crisis.

Ecuador, which is South America's fifth-largest crude oil producer, also plans to import fuel for domestic use and seek a $400 million loan from the Latin American Reserve Fund to avoid balance-of-payment problems from the oil stoppages.


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