Petroecuador Lost $6.2 Million Due to New Oil Strikes

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Researched by Industrial Info Resources (Sugar Land, Texas). The government of Ecuador declared a state of emergency in three northeastern oil-producing provinces (Napo, Sucumbios and Orellana) due to clashes between protesters and troops at the state-owned oil company Petroecuador (Quito, Ecuador). According to Jaime Crow, Vice President of Petroproduction, as a consequence of this cut in oil production, Petroecuador has already lost $6.2 million.

On March 6, 2006, protesters stormed again into the Salado pumping station, suspending the activities of Ecuador´s main private oil pipeline, the OCP link (Oleoducto de Crudo Pesado) located in the jungle region of Napo (100 miles east of the capital Quito). A state of caution, which allows for suspension of crude oil sales without sanctions from buyers, resulted from the previous day´s protest where more than 4,000 oil workers demanded that the government give more than $100 million to their local communities for the building of roads, bridges, a new airport and other infrastructure necessities. According to the presidential spokesman Enrique Proano, “the government ordered security forces to restore order in the region with the aim of protecting people’s safety, as well as public and private property.”

The state of emergency, which prohibits protests and marches, came after protesters stormed again into the Salado pumping station suspending the activities of Ecuador's OCP link. This pipeline transports a maximum of 450,00 barrels per day from the Amazon region to a port on the Pacific coast; however, at the time of the stoppage it only carried 160,000 barrels per day.

Ecuador is the fifth biggest oil producer in South America producing 532,000 barrels of oil per day. The great majority of Ecuador´s oil production fields are located in the country´s western Amazon region. Overall, around 35% of the government´s revenue comes from the export of crude through the oil pipelines that run from the Amazon jungle to the Pacific ports totaling $5.4 billion last year. According to Petroecuador´s declarations, protesters damaged the station´s electric and communications equipment. Even though damages were repaired the following day allowing the oil company to resume pumping operations, Petroecuador lost $6.1 million due to cuts in oil production of 156,992 barrels of crude oil.

Other shutdowns

Last month, protests in Ecuador caused the closure of the OCP pipeline and also the Salado pumping station. Petroecuador was forced to invoke force majoure and suspend exports to ensure domestic supplies due to protests in these areas. Due to the shutdown of the Sote Trans-Ecuadorian oil pipeline, Petroecuador could not export 275 thousand barrels of crude oil resulting in an $11 million loss.

Moreover, in August 2005 residents of Orellana and Sucumbios launched a general strike to demand money from Quito and from the foreign oil companies operating in their region to fund economic development, especially road-building and electrification.

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