Ecuador To Leave Oil In Ground
By Duroyan Fertl
09 August, 2010
On August 3, the Ecuadorian government signed a landmark deal to prevent drilling for oil in the ecologically unique Ishpingo-Tambococha-Tiputini areas of the Yasuni National Park (Yasuni-ITT).
The agreement, signed by the government of left-wing President Rafael Correa and the United Nations Development Program (UNDP), guarantees that the estimated 900 million barrels of oil that lie beneath the pristine Amazonian region will remain untouched, as will the forest above.
In exchange, Ecuador will receive US$3.6 billion as compensation for the revenue it would otherwise have made from the oil — about half its estimated value.
The Yasuni National Park is one of the most biodiverse sites on Earth, covering 982,000 hectares in the Amazonian rainforest and Andean foothills. It contains more tree species in one hectare than there are in the whole of the US and Canada combined.
It shelters at least 28 highly endangered vertebrates including jaguars, the white-bellied spider monkey, the giant otter and the Amazonian manatee, and hundreds of species found nowhere else on Earth.
Yasuni is also the ancestral territory of the Huaorani people, as well as two other indigenous tribes who live in voluntary isolation, the Tagaeri and the Taromenane.
Over past decades, large parts of Ecuador’s Amazonian region have been permanently damaged by oil drilling. Indigenous communities have suffered both the brunt of this ecological destruction and violent oppression by oil companies.
A major court case brought by 30,000 residents of the Ecuadorian Amazon against Chevron Texaco for causing an “Amazonian Chernobyl” is nearing its verdict, despite 20 years of threats and manoeuvres by the oil company.
Correa launched the Yasuni-ITT initiative in 2007 seeking international financial contributions equivalent to half the revenue the oil would have brought the country in exchange for leaving the reserve untouched.
Through the project, Correa aimed to secure funds for key social programs and infrastructure in Ecuador, while protecting the environment and contributing to the battle against climate change.
Negotiations for the project almost collapsed, however. International support was slow to appear, and Ecuador went though three different foreign ministers and three negotiating teams. Correa criticised many of them for not negotiating forcefully enough.
At the same time, mining continued in parts of the park, and indigenous and environmental protestors clashed with the government, blockading roads and organising large protests against mining.
Ecuador’s civil society organisations, and the Huaorani people, helped to keep the project alive by building support for it nationally and internationally.
Initial donor countries include Germany, Spain, France, Sweden, and Switzerland, who have committed an estimated $1.5 billion.
The funds, when received, will be placed in a trust fund administered by the UNDP, and will be used to protect 4.8 million hectares in Ecuador's other national parks, to develop renewable energy sources and to build schools and hospitals for indigenous communities.
“We are seeking nothing less than a new paradigm for development. This is what the majority of people in Ecuador want”, said Daniel Ortega, a spokesperson for the environment and climate change ministry.
”Yasuni will remain protected through generations.”
The newly ratified deal also prevents the release of around 410 million tonnes of carbon dioxide from burning the oil, and may set a radical precedent for future climate change negotiations. Guatemala and Nigeria have already approached Ecuador for help design similar programmes.
Praise for the project has been tempered, however, by concern from environmental and indigenous groups that the Yasuni deal may provide cover for the Ecuadorian government to open up other areas of the Amazon to exploitation.
“We hope that the success of the Yasuni proposal doesn't mean a defeat for the forests and people of the southern rainforests”, German Freire, president of the Achuar indigenous people told the non-profit Amazon Watch.
“We don't want Correa to offset his lost income from leaving the ITT oil in the ground by opening up other areas of equally pristine indigenous lands.”
The Ecuadorian government itself stressed that the agreement will not become a reality until the promised contributions from governments are actually paid.
The criticism from indigenous and environmental groups notwithstanding, a number of gains have been made under Correa’s government.
In July, UNESCO removed Ecuador’s Galapagos Islands from its World Heritage in Danger list, in response to Ecuador’s efforts to reduce the impact of tourism, fishing and non-native species.
Ecuador’s new constitution — drafted by a popular Citizens’ Assembly in 2007 and adopted in 2008 — guarantees the right to clean water, and grants enforceable legal rights to the environment.
Widespread distrust of Correa’s mining and water policies remains among Ecuador’s powerful indigenous and environmental movements, however. Both sides have traded insults in recent months.
The Yasuni agreement also comes a week after Ecuador enacted a law increasing state control over the oil sector. Previously mining companies and the government shared the costs and profits of production, with companies paying additional tax on superprofits.
Under the new law, Ecuador will own 100% of the oil, with 25% of gross oil income going directly to the state. Companies will receive a flat “fee” for the “service” they provide by extracting the resource.
The new arrangement also means that Ecuador — rather than oil companies — will be the main beneficiary of fluctuations in the international oil price.
“The new payment plan will likely restrict private windfalls when world oil prices quickly rise”, Alexis Mera, legal secretary to the president's office, told television station Uno.
“With the new law, we pay them a rate for oil produced”, Mera said. "They won't take away a single drop of oil."
Correa also threatened that companies who refuse to renegotiate their mining contracts in line with the new law will face nationalisation. Companies now have 120 days to renegotiate their contracts or they will be taken over by the state oil company, Petroecuador.
Ecuador is the fifth-largest crude producer in the Americas, producing an estimated 480,000 barrels per day, which accounts for around 60% of the country’s export revenue and is the financial backbone of Correa’s social programs.