Oil moratorium agreement with indigenous could affect government revenues; Gasoline prices drop sharply; Coastal social groups plan protests

Sep 12, 2022 | 0 comments

The oil exploration moratorium agreement signed last week between the government and indigenous organizations could have a major impact on future tax receipts, Energy Minister Xavier Vera said Sunday. “We had set a goal of producing one million barrels of oil a day within four years and this agreement makes that unattainable,” he said. “It means that future oil revenues from oil companies will be less than we had planned.”

Prices for some gasoline and diesel fuels are heading down as international petroleum market prices drop.

Last week, the government agreed to freeze new oil exploration concessions until residents of the affected Amazon areas vote to allow it. Indigenous nations have complained for years that the government has ignored the “prior consultation” law that allows residents a say in oil production affecting their areas.

Vera conceded that there has been “ongoing controversy” about whether Ecuador’s consultation law has been followed. “It is a difficult issue since we must balance the needs and interests of local communities with those of the nation,” he said. “Revenue from oil funds the social needs of the country, including healthcare, education and public infrastructure. A reduction of revenue will have an impact on the services provided to everyone, including the people who live in the oil production regions in the Amazon.”

During negotiations between the government and indigenous groups, Conaie President Leonidas Iza said that the government has “lied again and again” to indigenous people that oil revenues would be invested in their communities. “They made promises for years that indigenous lives would be improved but it did not happen.”

In the agreement signed last week, the government promised to suspend oil exploration for at least 12 months to give local communities the chance to accept or reject oil activities.

According to Vera, the agreement does not affect current oil production. “The wells already in operation and beginning operation will continue to produce oil for export and domestic use. The effect of the agreement will be felt in the future, depending on local consultations.”

Gasoline prices drop sharply
The price of Super and Ecoplus gasoline will take a big drop starting Monday due to the downward trend of international oil prices. Super will cost $4.68 a gallon, down 45 cents from $5.13, while Ecoplus will cost $3.89, down 19 cents.

According to Petroecuador, the new prices are the lowest in four months. “Oil market experts believe that prices have reached a price plateau but say the situation remains volatile due to the impact of the war in Ukraine,” Ecuador’s public oil company said in a statement.

The price of Extra, Ecopais gasoline and diesel will not change, according to Petroecuador, since they are subsidized by the government at $2.40 a gallon.

Coastal groups plan protests
Despite progress announced last week in talks between the government and indigenous groups, three social organizations on the coast say they are planning to strike due to lack of progress on local issues. “We have been ignored in these discussions and have suffered for years from a lack of attention,” the Confederación Nacional de Organizaciones, Indígenas y Negras [Fenocín] said in statement on Saturday.

“We are evaluating our mobilization options and unless we receive assurances that the status quo will change, we will mount protests in the coming days,” Fenocín said. “We are pleased to see the government consider the demands of the campesinos and indigenous populations of the sierra and the Amazon and expect the same attention for the coastal and littoral regions.”

The statement continued: “The coast escaped much of the social disruption experienced in the sierra in June but this will change if we do not receive attention from the government.”


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