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Friday, May 25, 2007

Extortion or global warming mitigation? - Ecuador looks for payments to leave oil in the ground

Mongabay, May24, 2007
reported more details on Ecuador's proposal to forgo development of Amazonian oil fields in exchange for payments from industrialized nations.

Last month Ecuadorian President Rafael Correa said that if the South American country is compensated with half of the forecasted lost revenues, it will not exploit oil in Yasuni National Park, setting aside the area for wildlife and indigenous people. Correa said the cost would be about $350 million per year for 30 years. Ecuador would earn about $700 million per year if the fields were developed.

In a conference call Wednesday with the University of Maryland, Ecuador's Energy Minister Alberto Acosta provided additional details on the proposal.

He said developing the Ishpingo-Tambococha-Tiputi or ITT oil fields, believed to hold 900 million to one billion barrels of oil equivalent, would release about 108 million tons of CO2 and require more than $4 billion in cleanup costs. He noted that development of the field is expected to require at least $5 billion in investment.
Acosta said that Italy, Norway, the Inter-American Development Bank, the United Nations and universities in the United States have expressed interest in the concept. Ecuador will wait up to a year for the international community to respond to the overture.

Acosta said that the aid money would go into a trust fund that would be managed by an "international oversight body". Ecuador presently has more than $18 billion in external debt according to the CIA.

Oil operations in the Ecuadorian rainforest have been controversial since American oil giant Texaco (now a subsidiary of Chevron) entered the region in 1958. Environmental groups and indigenous rights' organizations said Texaco's oil exploitation caused widespread pollution and environmental damage and blames the firm for high rates of cancer among local populations. Chevron is currently facing a $6 billion lawsuit on behalf of more than 30,000 affected people.

"The first option is to leave that oil in the ground, but the international community would have to compensate us for immense sacrifice that a poor country like Ecuador would have to make," said President Correa, as reported by the Environmental News Service (ENS), in an April radio address. "Ecuador doesn't ask for charity, but does ask that the international community share in the sacrifice and compensates us with at least half of what our country would receive, in recognition of the environmental benefits that would be generated by keeping this oil underground."

CITATION: -- (2007) "Ecuador Seeks Compensation to Leave Amazon Oil" ENS. April 24, 2007.

Mercedes Alvaro (2007). "Ecuador proposes massive debt swap to avert development of ITT oil fields" MarketWatch. May 24, 2007.

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