Sacha oil field contract still in doubt as Chinese-led firm has not delivered advance payment

Although the government announced earlier in the week it had has signed an agreement to allow oil production in the Sacha reserve, the deal will be cancelled unless Chinese-led coalition Sinopetrol delivers an advance payment of $1.5 billion. On Thursday, President Daniel Noboa said the deal is not a “sure thing” until the money is received.

Presidential candidate Luisa González says she will cancel any agreement to drill for oil in the Sacha reserve in northeast Ecuador.

“We have an agreement with Sinopetrol but the final contract has not been signed,” he said. “The reason is simple. If they do not respond with the urgency that the Ecuadorian people deserve, we will analyze other options.” The president added that the agreement stipulates the transfer of funds by March 11 before the project goes forward.

Noboa claimed that news reports that a contract had been signed Monday were incorrect. “This was an agreement to proceed but it is contingent on the receipt of funds.”

Ecuador’s Petroecuador has operated drilling sites in the Sacha field since 1990, but the government claims it does not have the capacity to expand operations there.

Indigenous groups have fiercely opposed opening oil production in Sacha, claiming it is part of their “Amazon heritage.” Leonidas Iza, president of the Confederation of Indigenous Nationalities (Conaie) said the concession of Sacha is a “betrayal” of previous understandings to leave most of Sacha in its natural state. “If the government attempts to go forward with the project, I assure you that our people will rise up to stop it.”

Noboa’s challenger in the April 13 runoff election, Luisa González, also opposes the deal with Sinopetrol, and says she will cancel the contract if she is elected. “We will overturn this concession,” she says. “We will revoke it because we will not hand over Ecuadorians’ resources to foreign companies that only seek their own benefit while the Ecuadorian people continue to suffer.”

Iza welcomed González support but wants a guarantee that she would not pursue oil drilling in Sacha with Petroecuador.

Sacha is located in northeast Ecuador, on the border with Yasuni National Park, and is believed to hold the largest untapped oil reserve in the country. Production of the area has been advocated by all Ecuadorian presidents, including Rafael Correa, who heads González’s Citizens Revolution party, since its reserves were verified in 2001,

In pursuing the deal with Sinopetrol, Noboa has said oil extraction in Sacha will involve minimal environmental damage. “The operation will be conducted with the greatest sensitivity to the surroundings,” he said.

He claims, however, that Ecuador needs income from the Sacha oil fields. “To advance our national interests, this arrangement is essential. Much of the income derived from exploiting this resource will go to reduce poverty in the region.”