NEWSECUADOR
Government starts to reopen oil zone
Ecuador's new defense minister traveled to an embattled zone that has been paralyzed by protesters for the past week.
BY STEVEN DUDLEY
sdudley@herald.com
QUITO - The government continued to struggle Saturday to regain control of oil wells, roads and bridges that protesters had taken over in the northeastern Ecuadorean provinces of Orellana and Sucumbíos as part of a paralyzing seven-day-old strike that has led to dozens of injuries and severely cut oil supply in this country.
'CRITICAL' SITUATION
Ecuador's newly named defense minister, retired General Oswaldo Jarrín, visited the embattled provinces Saturday and met with military officials who briefed him on what one officer, who was not authorized to speak to the press, characterized as a ''critical'' situation.
Crude production from state-run oil company Petroecuador was 33,000 b/d on Saturday, well below its normal 201,000 b/d, further aggravating the situation of a company that was obligated to call force majeure on all of its export contracts on Friday, and contributing to a $2 spike in light sweet crude prices on New York markets on Friday.
Security forces opened roads and bridges on Saturday, which saw small scattered protests, and assisted Petroecuador workers who slowly returned to the abandoned wells. Petroecuador officials said that 30 of 400 wells are back online, but the company already has lost 740,000 barrels of crude due to the strike.
Private oil production, which normally is 340,000 b/d, also was cut by more than half because protesters had sabotaged electricity lines and control valves, and dynamited a pipeline. Production was thought to be returning to normal with the assistance of the thousands of Ecuadorean army reinforcements sent to the region this week.
The strike is the biggest test yet for President Alfredo Palacio, who took power in April following protests that led to a congressional decision to remove former army colonel Lucio Gutiérrez from office.
Strikers backed by local authorities are calling for the government to back up promises to use oil revenue for social projects; some also are saying it's time for the government to restructure oil contracts it has signed with foreign oil corporations such as the California-based Occidental Petroleum, who they say are bilking the country of its natural resources.
COSTLY STRIKE
But the strike has hit the government the hardest. The protests will cost the government an estimated $486 million, Finance Minister Magdalena Barreiro told the press on Friday.
Petroecuador officials said it will take at least three months to return its production to normal, and the Ecuadorean government has asked the Venezuelan government for oil to help it fulfill some of its international obligations.
Oil is Ecuador's main export, representing about 15 percent of the country's GDP last year. Half of its production goes to the United States.
On Wednesday, Palacio called a state of emergency in the two provinces and authorities subsequently arrested the elected prefect of the Sucumbíos province as well as the mayor of its capital city Lago Agrio. Both men remain in custody.
But on Friday, Defense Minister Solón Espinosa resigned, ostensibly for personal reasons, although analysts speculated that Palacio removed him because of his inability to control this week's protest.
Palacio has hinted that former president Gutiérrez, who has a strong base of support in Sucumbíos and Orellana, was one of the political interests behind the strike.
Gutiérrez is thought to be residing in Peru.
BROKEN TIES
But protesters such as Angel Villacís, a city councilman from Lago Agrio, said his political party, the Democratic Popular Movement, had long ago broken ties with Gutiérrez.
''That's just the way for the president [Palacio] to discredit us,'' Villacís said during a telephone interview with The Herald.
Villacís is one of several public officials on the run from the law. But he says he'll remain ''in the trenches with the people'' until the government decides it's time to sit down and negotiate a settlement.
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