Ecuador and Oil

by Paul Donahue
February 2003

When you think of the small Andean country of Ecuador, oil may not be one of the first things that comes to your mind. However, it should be. In this country of snow-capped volcanoes, steamy jungles, and misty, bromeliad-laden cloud forests, over the past 40 years oil has become a defining issue. The upper Amazon Basin of Ecuador's "Oriente" (eastern region), along with the adjacent area of northern Peru, is oil rich, with oil one of Ecuador's principle exports. Much of the territory east of the Ecuadorian Andes has been divided up into oil concession blocks, and oil companies from around the world have drilling and production operations there.

One may not think that oil would have been a bad thing for a country such as Ecuador, but you would be wrong. Ecuador's oil woes began in 1964 when Texaco Petroleum and PetroEcuador, Ecuador's state oil company, began jointly exploring for and producing oil in the "Oriente". Since then, the history of oil exploration and oil exploitation in Ecuador has been one of unmitigated disaster.

Devastation and destruction have befallen both Ecuador's environment and the country's indigenous peoples. Wide-scale deforestation, polluted groundwater and thousands of oil spills have accompanied the oil exploration and drilling and the transport of that oil via pipeline up over the Andes and out to the Pacific coast. The environmental devastation as well as the flood of colonists into the region has posed a significant threat to the continued existence of the Quichua, Cofan, Shuar, Siona, Secoya, Achuar, and Huaorani tribes of eastern Ecuador. The Rainforest Action Network found that Texaco alone, in the thirty years the company operated in Ecuador, spilled 17 million gallons of crude oil, abandoned hundreds of unlined toxic waste ponds, and constructed oil roads that opened more than 2.5 million acres of the forest to colonization. Texaco is now gone from the Ecuadorian Amazon, but a slew of other oil companies from around the US, Canada, Europe and South America picked up where Texaco left off, and the environmental devastation continues today.

One might think that at least Ecuador would be better off financially because of the oil, but again you would be wrong. Before the oil came along, Ecuador was debt free. Now, Ecuador's external debt stands at over US$16 billion - over 80% of the country's GDP. The World Bank and the International Monetary Fund (IMF) have saddled the country with full-strength structural adjustment packages, demanding privatization of government enterprises, removal of consumer subsidies, reduction in government spending for social services and wage freezes. A good explanation of how this situation came about can be found in an article titled "Outrage in the Rainforest" by Dr. Leslie Jermyn , published on the web at

That brings us to Ecuador's latest oil woe, the OCP (Oleoducto de Crudo Pesado - heavy crude oil pipeline) pipeline. By 1972 Texaco had completed Ecuador’s first oil pipeline from the eastern jungle to the Pacific coast. In 2000, to qualify for IMF assistance, Ecuador's President Gustavo Noboa agreed to the construction of a second oil pipeline which would allow the private oil companies to double or triple their production, ostensibly generating more foreign currency for Ecuador’s coffers.

The US$ 1.1 billion OCP pipeline is now under construction. The controversial pipeline will transport heavy crude oil from Ecuador's "Oriente" to the Pacific Coast. Along its 300-mile route it will place fragile ecosystems and dozens of communities in jeopardy. Its route actually traverses 11 protected areas! The doubling or tripling of oil production to fill the new pipeline will set off an unprecedented boom in new oil exploration that could lead to the irreversible loss and destruction of some the country's last remaining old growth rainforest and territories of isolated indigenous peoples.

One of the protected areas the oil pipeline will cross, and the site where construction is currently stalled, is the Mindo Nambillo Cloudforest Reserve to the northwest of Quito. This reserve is probably the most important area of cloudforest remaining on the western slopes of the Ecuadorian Andes. It is home to more than 450 species of birds, 46 of which are threatened with extinction, and many of which are endemic to these rapidly shrinking areas of cloudforest on the western Andean slopes.

The Mindo community, opposed to the pipeline ’s passage through this rare ecosystem and inspired by forest defense tactics used in North America, staged a three month tree-sit early in 2002 to attempt to physically halt further construction of the pipeline. This action was the first of its kind in South America.

In July 2002 activist and former tree-sitter Julia Butterfly Hill traveled to Ecuador to show her support for the communities and organizations fighting the OCP pipeline. She visited the oil-producing areas in the Amazonian region, viewed the destruction that Texaco left in its wake, met with indigenous and campesino communities that continue to suffer the environmental and health impacts of this massive disaster, and visited the Mindo Nambillo Cloud Forest Reserve and OCP pipeline. At the end of her two week stay in Ecuador she was arrested with seven other peaceful protestors outside the Quito offices of US oil company Occidental Petroleum, a key member of the OCP pipeline consortium. After two nights in jail, and to avoid bringing further attention to the OCP pipeline project, she was deported. In Julia's words….

“When I heard about what was happening with the oil pipeline in Ecuador, I knew it was bad. After coming here and seeing the whole pipeline and what it is doing to the land and the people, I know more than ever that it is worse than that. This is very, very destructive. Being European-American myself, and with the oil being extracted for American and European markets, I am committed to doing what I can to stop it.”

“I come to Ecuador to stand in solidarity with people who stand against the absolute greed that imminently threatens the destruction of these priceless and diverse ecosystems. The annihilation of these critical forests and all their inhabitants for the laying of the oil pipeline and extraction of oil, is morally, socially, culturally, and ecologically wrong. I and many others throughout the world are deeply committed to helping the Ecuadorian people stop this crime against humanity and the Earth."

“From the Arctic to the Amazon, our dependency upon fossil fuels is detrimental to the people, the planet and our future generations. I call upon the OCP consortium, the German bank WestLB, the IMF, and the World Bank to immediately withdraw their support of this project. We have the technology and the tools to do things in such a better way. Now more than ever it is incumbent for us to do so. When we see these Ecuadorian citizens willing to put their bodies where their beliefs are, risking serious danger and hardships, we know that all other systems are failing —governments, corporations and consumers —all of us are failing in our responsibility to the planet, the people and the future.”

In an interview in November I asked Julia what Americans concerned about the OCP pipeline can do about it. Her immediate response was, "Get out of our damn cars." Some other suggestions are listed below.

Meanwhile, according to the group Amazon Watch, "Lead financer, German bank WestLB, continues to come under intense fire for syndicating a $900 million loan to the OCP in violation of its own lending policies. The loan, which does not meet minimum World Bank environmental guidelines has sparked public outrage in the German state of North Rhine Westphalia (NWR), which holds a 43 percent stake in WestLB. In recent months, several German government delegations have visited Ecuador to investigate the issue. US bank, Citigroup has also been highlighted as a top lender to consortium members.

"Los Angeles-based Occidental is a key member of the OCP consortium, and is planning significant expansion of its Ecuador operations in pristine Amazon ecosystems, in expectation of the pipeline’s completion.

"According to government sources, the majority of Amazon crude that will flow through the OCP pipeline is destined for markets on the West Coast of the United States. The OCP Consortium includes: Alberta Energy (Canada), Occidental Petroleum (OXY-USA), AGIP (Italy), Repsol- YPF (Spain), Perez Companc (Argentina), and Techint (Argentina). The US Bank JP Morgan Chase is the financial advisor for the project."


1. To learn more, visit Amazon Watch's website at A good overview of the project can be found at:

2. Good maps of Ecuador's oil concession blocks, existing pipelines, indigenous areas and protected areas can be found on PetroEcuador's website at:

3. West LB is the lead financier of the project. Let them know you are concerned about the threats posed by their pipeline. Phone, fax and email comments to West LB's New York headquarters. Telephone: (212) 852-6000, fax: (212) 852-6300, email:,