Ecuador freezes oil income from firm slated for massive Peru contract

The French company slated for a massive contract in Peru's Amazon region is having its income from oil revenues frozen in neighboring Ecuador. The announcement was made by PetroEcuador after the company, Perenco, missed its deadline to pay off $350 million in back taxes to Ecuador's government. According to reports, PetroEcuador said it would freeze the income from 720,000 barrels of oil produced by Perenco.

Ecuador's Oil Minister Derlis Palacios said the government still hopes to settle the dispute and allow the company to continue extracting crude from oil blocks 7 and 21 in the country's Amazon region. He denied speculation that the company is to be nationalized. "This doesn't mean we will take over its (Perenco) oilfields," Palacios told state television. "The dialogue from Ecuador's side is open."

Ironically, Ecuador's decision follows statements from high-ranking officials in Peru that Perenco's work there will transform Peru's economy. Perenco is hoping to exploit what is believed to be the biggest oil discovery in Peru in 30 years—a discovery which was welcomed by President Alan García by a personal visit to the site. Since then, the former Minister of Energy has expressed hopes Perenco's find will convert Peru from a net importer of oil to a net exporter, and the president of the "Hydrocarbon Committee" from Peru's mining, oil and energy trade association recently said he hopes Perenco will help overturn Peru's billion-dollar oil and gas deficit.

But the region where Perenco is working is inhabited by at least two uncontacted tribes. Peru's indigenous peoples' organization, AIDESEP, has proposed the creation of a reserve for the tribes, but to date no reserve has been created. Survival is urging Perenco to cease working in the area immediately. The identity of the tribes is not clear. One is known as the Taromenane, believed to be a sub-group of the well-known Waorani, and the other the Pananujuri.

Survival International director Stephen Corry said, "Oil work on the lands of uncontacted tribes will destroy them. It violates the UN declaration and international law. Peoples must no longer be destroyed, whether or not it's for the supposed betterment of the many." (Survival International, March 9; Reuters, March 4)

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