$350m to leave oil in the ground

Country asks developed world to pay it not to pump - and avoid further pollution of the Amazon rainforest

Rory Carroll in Lago Agrio

The Guardian, Friday August 31 2007

Long before you reach the site the jungle changes. Birds and insects fall quiet, streams turn inky and trees become stunted, their leaves blackened and scrunched up, like fists.

The trail turns wider and muddier, for vehicles come here, and there is an unfamiliar sound, a sort of whooshing, followed by crackling.

And then you see it: fire dancing over the tree tops. The flames seem to lick the canopy in great billowing tongues, as if the Amazon were burning.

It is a trick of perspective. As you get closer you see that the blaze comes from a 15-metre (50ft) metal tower in the middle of a clearing and that it shoots the flames skyward in controlled bursts. It is a technique to burn waste gas, one of countless flares dotted across the forests of eastern Ecuador, and it is a stark display of the extraction of oil from the lush heart of South America.

Oil has been pumped from here for almost four decades and the result, say environmentalists, is 1,700 square miles of industrial contamination, with rivers poisoned, wildlife wiped out and humans falling sick.

But now, mindful of the environmental and political cost, the state has made a startling proposal: if wealthy nations pay Ecuador $350m (£174m) a year - half of the estimated revenue - it will leave the oil in the ground.

Supporters say it is an idea whose time has come, a logical step forward from carbon offsetting in which rich polluters in developed countries compensate for environmental damage caused by their consumer habits.

Since it was first floated in June there have been promising signals, said Alberto Acosta, a former mining minister and close ally of President Rafael Correa. The German and Norwegian governments have expressed interest, as have parliamentarians from Italy, Spain and the European Union. "This could be a historic accommodation," he said. Donors could pay in cash, debt relief or other indirect ways.

Some greens champion the proposal as a way to protect biodiversity and combat global warming while allowing a poor country to develop. "It's not utopian, it's realistic," said Esperanza Martínez, of the Quito-based Acción Ecológica.

But others are sceptical. They predict that rich countries will not stump up the money and that Ecuador's government will ultimately find its oil bounty too tempting to pass up. The government and oil companies are already eyeing another chunk of Amazonian rainforest, the Yasuni national park, a Unesco-designated biosphere reserve. Beneath part of the 982,000-hectare (2.45m-acre) park lie the Ishpingo Tambococha Tiputini oilfields, with an estimated 1bn barrels of heavy crude. For the cash-strapped government this is a tempting bounty potentially worth up to $700m a year.

"It's a ploy, we don't trust the government on this," said Anita Rivas, the mayor of Coca, a town on the edge of the park. Like many in the Amazon she scorned the notion that oil revenues would ease poverty, a mantra of successive governments worn thin by decades of stolen or wasted revenues. "Where are the benefits?" said Ms Rivas.

Even Mr Acosta said: "We don't want to develop it because we know there will be damage. But if we have no other choice then, lamentably, we will do it."

The costs of Ecuador's oil industry are all too visible in those parts of the jungle where crude has been drilled, spilled, pumped and dumped - a vision of what might be in store for Yasuni park.

Between Coca and Lago Agrio, bleak oil-rush settlements carved out of the bush, oil is never far away. It is in the 300-mile pipeline stretching through valleys and mountains. It is in the air in the form of rain and waste gas burnt by flares. It is in 1,000 or so waste pits of black sludge which leak into the water supply. It is in the soil in the form of congealed tar which stunts trees.

It is in the bodies of residents, according to several scientific studies, in the form of tuberculosis and other diseases which make hamlets such as San Carlos, adjacent to a refining plant, zoom off the medical charts. "Two-thirds of my patients have contamination-related illnesses," said Rosa Moreno, a nurse at a small clinic.

Oil is even in the name Lago Agrio. It means Sour Lake and is taken from the Texas hometown of Texaco, the US oil giant which drilled here from 1972 to 1992 and operated as a mini-state.

The even bigger giant that subsequently bought it, Chevron, is now embroiled in a $6bn class-action suit brought by 30,000 indigenous people and settlers. They claim Texaco poisoned the region by dumping billions of gallons of toxic waste-water and want the company to clean it up.

It is one of the world's biggest environmental cases and has been dragging on for 14 years. "What happened here we can't let happen anywhere else, least of all Yasuni," said the plaintiffs' lawyer, Pablo Fajardo.

Chevron says Texaco broke no law, performed a $40m clean-up in 1995 and that any contamination must be the fault of other companies that have operated there since then. "Ours was a beautiful operation, very clean. This lawsuit is a farce," said Rodrigo Perez, a company lawyer.

Regardless of blame, there is no doubt that oil has devastated much of Ecuador's forests. The question is whether Yasuni, which is said to have more tree species in an average hectare than there are the US and Canada combined, will be next.

For the indigenous tribes who call this home the untapped wealth far beneath the jungle floor is a threat.

"We wish it weren't here," said Wiyame Irumenga, an indigenous leader and forest ranger, tapping a bare foot against the earth. "We wish people would just forget about it."