OIL WAR IN ECUADOR
by MARTIN OLIVER AND CLAIRE HUTCHINGS
For thirty years in Ecuador, the Amazon and its peoples have suffered the devastating effects of the oil industry. Now a consortium of multinational oil companies are moving ahead with a controversial new oil pipeline known as the OCP (Oleoducto de Crudo Pesados), due for completion in June 2003. The pipeline will transport heavy crude oil from the country's Amazon rainforest for 314 miles across geographically unstable land to Esmeraldas on the Pacific Coast, putting fragile ecosystems and indigenous communities at risk.
To fill the OCP, Ecuador must double its current oil production by exploiting vast areas of the Amazon, where there are plans for hundreds of new oil wells and associated roads and processing plants. The damaging impacts of the oil industry will be felt amongst the country's last remaining old growth rainforest, and territories that are home to isolated pockets of indigenous peoples.
WHO IS BEHIND THE OCP?
THE IMF: In response to Ecuador's huge external debt (currently US $16 billion), the International Monetary Fund defined a solution in doubling Ecuador's oil production capacity. The IMF insists that 90% of Ecuador's new oil earnings must be used to repay the debt.
OCP CONSORTIUM MEMBERS: Including EnCana (Canada, 31.4%), Repsol-YPF (Spain, 25.6%), Pecom Energia (Argentina, 15%), Occidental Petroleum (USA, 12.2%), ENI-AGIP (Italy, 7.5%), Techint (Argentina, 4.1%), Perenco (France/UK, 4%). Techint, a company with an apalling environmental track record, is building the pipeline with a carelessness that even resulted in a temporary suspension of the project's environmental license by the Ecuador government. Encana is the largest foreign investor in the Ecuadorian oil fields, and has gained a reputation for environmental contamination and social disruption. The Toronto Environmental Alliance, Greenpeace Canada, the David Suzuki Foundation, and the Sierra Club of Canada have called on Encana to withdraw from the controversial OCP; however, Encana has not responded to these concerns.
FINANCIAL BACKING: German Westdeutsche Landesbank (WestLB) is distributing a US $900 million loan to finance the OCP. Other supporting financial institutions are the Italian Banca Nazionale de Lavoro (BNL), Deutsche Bank, Citibank, and the project's financial advisor J. P. Morgan Chase.
GOVERNMENT: during 30 years of oil dependency, poverty has increased in Ecuador. Yet the OCP has been broadcast as a cure-all for the nation's economy. Security forces have met OCP opponents with severe repression, resulting in injuries, arrests and deaths.
US MARKETS: Ecuador's oil exports are primarily destined for consumption in the United States, particularly California. US reliance on oil (the main fossil fuel responsible for climate change) is accelerating the destruction of the Amazon.
OCP VIOLATES ENVIRONMENTAL & SOCIAL STANDARDS
West LB has publicly stated that compliance with World Bank environmental guidelines is an 'indispensible condition of any engagement' with the OCP. However, a 2002 report written by Robert Goodland, chief of the Environment Department of the World Bank for 25 years, found that the OCP violated World Bank environmental and social criteria, especially in regard to biodiversity and risks to indigenous peoples.
Ecuador has been identified as one of the world's mega-diverse countries. With only 0.2% of the world's land area it is estimated to contain 10% of all known species. In May 2000 an Environmental Impact Assessment (EIA) of the OCP was carried out, but was deemed inadequate by a team of local and international scientists specialising in Ecuador's biodiversity. Experts pointed to serious dangers of extinction for endemic and threatened species.
Rather than running the OCP alongside the existing SOTE pipeline (the route of least impact), a northern route was chosen for the OCP. The SOTE pipeline was constructed by Texaco in the early 1970's, and crosses the country roughly east-to-west. Over the last thirty years it has experienced dozens of oil spills, having been ripped apart countless times by landslides, earthquakes, volcanic eruptions and insurgent bombings - all of which are risks for the OCP pipeline. This has already caused millions of gallons of crude oil to pour into river systems and local communities; plus a total of 2.5 million acres of rainforest lost due to the company's operations, and at least 350 toxic waste pits left behind.
The north route crosses steep mountainous terrain, regions of high biodiversity and eco-tourism activity, and was criticised in a report by the Smithsonian Institution. The new pipeline cuts through seven protected national parks and reserves, including the cloudforest of the Choco-Andean Corridor, a World Bank Global Environment Facility Biosphere Reserve. The Mindo Nambillo Cloud Forest Reserve contains several threatened and endangered Andean habitats, and has some of the world's richest biodiversity. It is home to 450 bird species - 46 of which are endangered - and has been designated the first 'Important Bird Area' of South America.
Australian volunteers from the Lismore-based Rainforest Information Centre (RIC) have been working in these areas since the late '80's and were funded by the Australian government aid agency AusAID to help protect them. In particular, RIC's efforts were instrumental in the reservation of the 56,000 Ha Panacocha Reserve with it's 9 species of monkeys, pink Amazon River dolphins, Jaguars and Ocelots. Now seismic lines snake through the reserve and Occidental Petroleum prepares to drill wells there.
Critics believe that the inevitable pipeline leaks and ruptures will cause ecological disaster by spilling oil into threatened forest ecosystems and rivers, and contributing to further deforestation and contamination of groundwater.
New oil reserves needed to fill the OCP are already being searched for in the ancestral homes of the Achuar, Shuar, Huaorani, Quichua, Shiwiar and Zapara indigenous communities in Ecuador's southern Amazon region. Many of these communities have vowed never to allow oil development on their land - for them literally a matter of life or death.
In rural areas, small farms have been affected by pipeline construction, with damage to crops, grazing lands and water supplies. Many landholders have reportedly been pressured, blackmailed or threatened into signing agreements with the consortium. Some of those who refused have been forced off their land by the Ecuadorian military, at OCP's request, and given nothing in compensation. The arrival of five thousand construction workers has also had a heavy impact on rural communities, with problems resulting such as violence, alcoholism and prostitution.
A dramatic increase
in oil will also affect the communities who live alongside the country's principal
oil refineries. The Afro-Ecuadorians of the coastal Esmeraldas region already
have some of the highest rates of cancer and malnutrition in the country - plus
respiratory, skin and stomach illness due to ongoing air, water and land contamination.
It is believed that most of the heavy crude deposits to be tapped by consortium members lie underneath national parks, wildlife reserves and indigenous territories. Specific protected areas at risk include the Yasuni National Park, Limoncocha, Pañacocha and the Cuyabeno Wildlife Reserve.
The pipeline, shelved for ten years due to opposition, has been riddled with problems since construction began in 2001. Communities across Ecuador have launched grassroots actions to halt the OCP, including a tree-sit blockade by residents of the Mindo Cloudforest in January 2002, the first of its kind in South American history.
Opposition to the pipeline has united environmental and social justice groups worldwide. Resistance has taken a heavy toll on the project, with delays putting OCP nearly US$2 million over budget. In October 2002 OCP's investment rating was downgraded to borderline junk status, on account of growing environmental, political and economic concerns.
The OCP pipeline is 90% complete, and valiant efforts continue to try and halt construction. Now we can prevent new oil wells being drilled, and further exploitation of the unique rainforests and indigenous communities of Ecuador's Amazon.
1) In March this year, Ecuadorian activist filmmaker Juan Pablo Barragan produced a 35-minute film about the OCP, entitled Amazon Oil Pipeline - Pollution, Corruption and Poverty. Reflecting the nationalities of companies that are members of the consortium, this is available in English, German, Spanish, Italian, Portuguese and French. Following screenings of the video, letters are being written to OCP member oil companies, West LB and other banks, Ecuador's president, and the IMF. Please contact the Rainforest Information Centre (details at the end) for a copy of this video to screen for your organisation, community or friends.
2) Please write to the US office of German Bank West LB asking them to pull out of the OCP project due to non-compliance with World Bank standards, and demand repayment of the US $900 million dollars they have loaned to the pipeline project.
West LB, Regional
Head of Structured Finance Americas, Mr. Manfred Knoll, 1211 Avenue of the Americas,
New York, NY 10036, USA
Ph: +1 212 852 6250
Fax: +1 212 852 6232
3) Please write to EnCana, a Canadian oil company with the biggest stake in OCP:
Gwyn Morgan, Chief
Executive Officer, EnCana Corporation, PO Box 2850, Calgary, Alberta T2P 2S5,
Phone: +1 403 645 2000
Fax: +1 403 645 3400
Learn more about
the Canadian angle on this issue at http://www.globalaware.org/Index_CD_eng.html
See Globalaware's slideshow at http://www.globalaware.org/Front%20Page.htm
4) Please write
to the President of Ecuador, with copies to the Minister of
Energy and to Acción Ecológica, demanding:
of the contract between the Ecuadorian government and the OCP
consortium because of human rights violations and environmental impacts.
b) That Ecuador declare a moratorium on the expansion of the oil frontier that is
threatening protected areas and indigenous territories.
Gutiérrez, Despacho Presidencial, Calle García Moreno y Chile,
Ph: +593 22 580833
Fax: +593 22 580748
Ing. Carlos Arboleda
Heredia, Ministro de Energías y Minas, Calle Juan León Mera y
Orellana, Ed. Ministerio de Obras Públicas, Quito, Ecuador
Ph: +593 22 553043
Fax: +593 22 906350
Acción Ecológica: email@example.com
5) Please contact the International Monetary Fund (IMF) to request that they cancel Ecuador's debt in exchange for Ecuador protecting the Amazon forests and indigenous people.
Fund, Attn. Horst Koehler, Managing Director,
700 19th Street, NW, Washington, DC 20431, USA
Ph: +1 202 623 7300
Fax: +1 202 623 6278
Anoop Singh, Director
of the Western Hemisphere Department, IMF
Ph: +1 202 623 6222
Fax: +1 202 623 7499
Amazon Watch, 2350
Chumash Rd, Malibu, CA 90265, USA
Ph: +1 310 456 9158
Fax: +1 310 456 9138
Centre, PO Box 368, Lismore, NSW 2480, Australia
Ph: +61 2 6621 8505 / 6621 3294
www.rainforestinfo.org.au/ocp/welcome.htm (Good for updates and action alerts)
Alejandro de Valdez, N24 33 y Av. La Gasca, Quito, Ecuador
Ph: +593 22 547516
Fax: +593 22 527583
Website: www.accionecologica.org/petroleo.htm (Spanish only)