|The new oil reality for Yasuní|
Eight oil concessions cover Yasuní National Park and the Waorani Ethnic Reserve. Moreover, across the border in Peru is a continuous mass of 20 oil concessions. This “oil landscape” has changed dramatically over the past several months. Here is a block-by-block update on the recent changes and prospects for the future.
Block 15 - The most dramatic recent change in the oil landscape has occurred in Block 15. On May 15, the government of Ecuador canceled Occidental’s contract as operator of Block 15. In essence, Ecuador kicked an American oil company out of the country; a very bold move that took many by surprise. Ecuador argues that Oxy violated the terms of the contract when the company sold 40% of the block in 2000 to another company without authorization from the government.
This move was especially striking due to the fact that Block 15 is the most productive block in Ecuador. In 2005, nearly 100,000 barrels a day were extracted from Block 15, nearly one-fifth of the production in the entire country. Further, Block 15 contains the Eden-Yuturi oil field, the highest producing field in Ecuador (66,000 barrels a day).
Petroecuador, the state oil company, immediately took over Block 15. There was much speculation that Petroecuador would quickly form a partnership with another company in order to effectively exploit the block. State oil companies from Brazil (Petrobras), Colombia (Ecopetrol), Chile (Enap), China (Sinopec) and Malaysia (Petronas), along with Spain's Repsol YPF have all expressed interest in operating Block 15. However, it now appears as if Petroecuador will remain the sole operator of Block 15 until at least January 2007.
Block 31 - In April 2006, Petrobras announced that it had made significant changes to its project in Block 31. Most importantly, the company will not build an access road or processing facility within Yasuní National Park; instead Petrobras plans to access the two drilling platforms by helicopter and build the processing facility a few kilometers outside the park. These changes came after intense opposition from environmental and scientific groups to the construction of a road and processing facility within a national park. The Ecuadorian Environment Ministry listened to this opposition and essentially forced Petrobras to redesign the project. The environmental consulting firm Entrix is now preparing the new environmental impact studies.
The Waorani leadership, however, continues to make clear that they oppose any new oil development by Petrobras, roadless or not, on their ancestral territory. In May, the President and Vice President of ONHAE, and the President of AMWAE, all attended the United Nations Permanent Forum on Indigenous Issues in New York. During the meetings, the Waorani leaders called on Petrobras to leave its territory.
Blocks 14 and 17- In March 2006, Andes Petroleum Company finalized its purchase of Encana’s Blocks 14 and 17. The purchase also included Encana’s leading stake in the OCP pipeline. Andes Petroleum is a partnership between two Chinese state oil companies, CNPC and Sinopec. Andes Petroleum stated that it plans to invest $200 million in exploration and development. Thus, there is much concern about increased levels of seismic testing in the two blocks. Particular concern centers on the fate of Block 17; much of this block overlaps with territory known to be used by an indigenous group living in voluntary isolation known as the Taromenane. The government is soon expected to finalize the borders of the Intangible Zone, an area designed to protect the Taromenane. All oil activities within this zone will be prohibited. Much of Block 17 is overlapped by this Intangible Zone.
ITT Block - The ITT Block (named after the Ishpingo-Tambococha-Tiputini oil fields) is the elephant in the room. The largest known oil reserves in Ecuador reside under the ITT block---over 900 million barrels. This accounts for nearly ¼ of Ecuador’s total reserves. Thus, there is intense political and economic pressure to develop this block even though it is located with a nearly pristine part of Yasuni National Park. The government has indicated that it in order to exploit the block it will likely form a partnership with another state company, thus making Brazil’s Petrobras and China’s Sinopec leading candidates. Petroecuador is expected to name its partner at any moment now.