Ecuador seeks international funding to abandon oil drilling project in jungle reserve

IHT, 5/6/07

QUITO, Ecuador: In an unusual move for an oil-producing nation, Ecuador's leftist president is turning to the international community to provide the poor Andean nation with funding in exchange for abandoning a project to drill for petroleum in a nature reserve.

President Rafael Correa said Ecuador is seeking some US$350 million (€260 million) annually for 10 years not to drill for oil in Ishpingo-Tiputini-Tambococha fields, located in the Yasuni National Park deep in Ecuador's northeastern jungle.

Correa was launching the campaign Tuesday, the United Nations' World Environment Day.

The jungle area, which holds close to 1 billion barrels of crude, is a UNESCO Biosphere Reserve known for its rich variety of flora and fauna. Some environmentalists say there is more plant life in the reserve — about the size of Puerto Rico — than in the United States and Canada combined.

Environment Minister Ana Alban said Ecuador hopes to receive at least half of the income it would have generated by oil drilling at the site.

Xavier Bustamante, director of the Ecuadorean environmental organization Fundacion Natura, was optimistic about the "innovative" campaign. But he said US$350 million (€260 million) a year is "an ambitious amount, you can't ignore that, but they could get it if we sell the message clearly."

Carlos Pareja, president of the state oil company Petroecuador, has said that while the government's "priority" is not to drill on the reserve, the potential income is crucial.

"It is inconceivable that there is extreme poverty and undeveloped wealth in the country," Parejas said in February. "I don't see how to improve the economy if we don't develop" the project.

In March, state oil companies from China, Chile and Brazil expressed interest in presenting bids for the fields. A month later, Brazil's state-run oil company Petroleo Brasileiro SA, or Petrobras, and Petroecuador signed a memorandum of understanding to develop them.

Terry Karl, a Stanford University professor who has written widely on oil and politics, said that if Ecuador uses the money to fund education, health care and environmental programs "you could be really be coming up with a very interesting formula."

But the devil is in the details, she said.

"It's not enough to say, 'We are the government of the poor,'" she added. "You have to have very well directed, well thought-out, long-term investments that produce teachers and clinics."

Ecuador is South America's fifth largest oil producer. Oil is the country's major export, providing 55 percent of its annual export income of US$9.8 billion (€7.2 billion).