popular articles

Yasuni referendum: dilemma between biodiversity and oil in Oriente

The Yasuni referendum in Ecuador marked a turning point in the debate over the country's oil industry, with a 58.95% majority in favor of halting oil production in the Yasuni-ITT reserve. This decision underlines the continuing tension between the oil industry and environmentalists, and could influence other South American countries.

Please share:

The recent Yasuni referendum in Ecuador has sparked a crucial debate about the future of the country’s oil industry. This consultation marked a decisive step in Ecuador’s history, highlighting the persistent tension between the oil industry and environmentalists.

Yasuni-ITT: The conflict between the oil industry and environmental protection in Ecuador

Oil production from Yasuni Park, in particular “Block 43”, comprising the Ishpingo, Tambococha and Tiputini (ITT) fields, currently accounts for 12% of Ecuador’s oil production. Yet the population voted overwhelmingly, at 58.95%, in favor of halting oil production in Yasuni-ITT.

The ITT block in Yasuni Park, Ecuador

Ecuador’s oil-dependent economy is under increasing environmental pressure from environmental groups and indigenous communities. The recent Yasuni referendum was the culmination of many years of struggle between the oil industry and environmentalists. However, these claims are not new.

Texaco in Ecuador: The quest for environmental justice

As early as 1993, fourteen associations formed the Amazon Defense Front, representing 30,000 victims of the activities of Texaco, an American company that operated Ecuador’s oil fields between 1964 and 1992. The environmental damage caused by Texaco is alarming, with 2 million hectares of forest contaminated by 64 million liters of spilled crude oil, 880 leaking oil waste pits, and 60 billion liters of contaminated water discharged into rivers. Added to this are the serious consequences for local populations, such as cancers, illnesses linked to water pollution, and the violation of human rights.

This environmental movement also led to the recognition of a “right to nature” in Ecuador’s new Constitution in 2008. It also gave rise to the Yasunidos group, the environmental group calling for national consultation on the fate of oil development in the heart of the Yasuni reserve, home to indigenous peoples such as the Waorani.

The delicate dance between the Amazon jungle and oil resources

At the heart of South America, Ecuador, named after the equatorial line that crosses it, offers an opulent biodiversity, despite its relatively modest size compared to France. In addition to its pristine beaches and snow-capped Andean peaks, this country is home to a precious part of the Amazon, geographically referred to as the “Oriente”. This region is a nugget of biological diversity, attested to by eminent scientists such as Alexander von Humboldt and Charles Darwin.

And yet, alongside this wealth of biodiversity, Ecuador is also rich in hydrocarbons. The heart of Oriente is home to the country’s largest oil reserves, making Ecuador South America’s fifth-largest oil producer. Its economy is largely based on these fossil resources, in particular oil and natural gas, as well as on mining, fishing, tourism and banana cultivation, among others.

However, this economic dependence on oil presents complex challenges. The closure of the Yasuni-ITT oilfield will have a direct impact on the country’s revenues, highlighting the delicate equation between environmental preservation and economic stability.

 

Ecuador’s economic and political challenges in 2023

The hydrocarbon industry plays a significant role in the Ecuadorian economy, contributing 32% of total foreign sales. Despite Ecuador’s exit from OPEC, stable international oil prices have maintained this source of revenue, generating a current account surplus forecast for 2023. However, rising global borrowing costs and environmental pressures have slowed investment in the oil sector, with potential long-term consequences for production and revenues.

President Guillermo Lasso has faced governance challenges, notably due to protests over rising fuel prices. The introduction of a differentiated fuel price mechanism to target subsidies on the most vulnerable populations reflects the complexity of the country’s political and social situation. Environmental concerns linked to the oil industry also remain a source of concern, with suspensions of mining concessions and worries about long-term oil production.

The environmentalists’ referendum victory: a game-changer

Ecuador is faced with a thorny dilemma that reflects the crucial challenges of our time: the preservation of its exceptional biodiversity or the temptation of oil exploitation, the mainstay of its economy. The August 20 referendum crystallized this dilemma. The victory of the “yes” vote marked a major turning point, bringing a halt to oil exploitation in the country’s iconic Yasuni Park, but the decision could also influence other oil-producing countries in South America, such as Brazil.

Ecuador’s dependence on hydrocarbons is therefore a complex and nuanced reality. Although the oil sector makes a significant contribution to exports and government revenues, environmental, social and political challenges continue to weigh heavily on its future. The country’s ability to maintain stable governance and adapt to the changing realities of the global hydrocarbon market will be key to ensuring a sustainable economic recovery in 2023 and beyond.

Yasuni: A precedent for South America in the battle between oil and biodiversity

The example of Yasuni Park is not limited to Ecuador. It could inspire similar initiatives in South America, home to the planet’s green lung. This region abounds in precious hydrocarbon reserves, notably Venezuela, which holds the world’s largest oil reserves, accounting for 18% of the global total. Despite this wealth, Brazil is Latin America’s leading producer.

Nevertheless, the preservation of biodiversity and the fight against climate change often take second place to oil production. Ecuador’s historic decision could influence its neighbors. It could also provoke reflection within the Brazilian giant, a member of the BRICS, which is seeking to preserve its growing economy.

What’s more, this decision could be paralleled by that of Colombia’s new president, Gustavo Petro, who chose to halt oil exports, despite the fact that they accounted for 40% of all exports and 12% of government revenues.

Register free of charge for uninterrupted access.

Publicite

Recently published in

US crude oil inventories fall by 4.3 million barrels

Commercial crude reserves in the United States declined more than expected, following increased refinery activity according to EIA data published on June 4.
TotalEnergies has signed an agreement with Shell to increase its stake in Brazil’s offshore Lapa field to 48%, while divesting its interest in Gato do Mato.
TotalEnergies has signed an agreement with Shell to increase its stake in Brazil’s offshore Lapa field to 48%, while divesting its interest in Gato do Mato.
SBM Offshore has signed a divestment agreement with GEPetrol to fully withdraw from the FPSO Aseng project in Equatorial Guinea, with an operational transition phase of up to one year.
SBM Offshore has signed a divestment agreement with GEPetrol to fully withdraw from the FPSO Aseng project in Equatorial Guinea, with an operational transition phase of up to one year.
Meren Energy has launched a partial divestment process for its EG-18 and EG-31 assets to attract new partners and reduce its exposure in Equatorial Guinea.
Meren Energy has launched a partial divestment process for its EG-18 and EG-31 assets to attract new partners and reduce its exposure in Equatorial Guinea.

PTAS Aker Solutions secures two-year offshore maintenance contract in Brunei

The oil services joint venture extends its contract with Brunei Shell Petroleum for maintenance and upgrade operations on offshore installations in the South China Sea.
Renaissance Africa Energy confirmed to the Nigerian government the operational takeover of Shell Petroleum Development Company’s onshore assets, stating it had surpassed the 200,000 barrels per day production mark.
Renaissance Africa Energy confirmed to the Nigerian government the operational takeover of Shell Petroleum Development Company’s onshore assets, stating it had surpassed the 200,000 barrels per day production mark.
Australian company Woodside Energy has filed a complaint with ICSID against Senegal, challenging a CFA40bn tax reassessment related to the offshore Sangomar oil project.
Australian company Woodside Energy has filed a complaint with ICSID against Senegal, challenging a CFA40bn tax reassessment related to the offshore Sangomar oil project.
Nigeria introduces a tax credit capped at 20% for oil operators meeting cost reduction targets, with a focus on gas and offshore projects.
Nigeria introduces a tax credit capped at 20% for oil operators meeting cost reduction targets, with a focus on gas and offshore projects.

Morocco funds expert mission to revive offshore exploration

Following the withdrawal of two British companies, Morocco launches a MAD2.5mn ($270,000) expert mission to boost the appeal of its offshore oil and gas sector.
International Petroleum Corporation repurchased 89,200 common shares between 26 and 30 May under its buyback programme compliant with Canadian and European regulations.
International Petroleum Corporation repurchased 89,200 common shares between 26 and 30 May under its buyback programme compliant with Canadian and European regulations.
US energy companies reduced the number of active rigs for the fifth consecutive week, reaching their lowest level since November 2021, according to data published by Baker Hughes.
US energy companies reduced the number of active rigs for the fifth consecutive week, reaching their lowest level since November 2021, according to data published by Baker Hughes.
The Swedish government will implement new disclosure rules for foreign vessels, specifically targeting tankers linked to Russia’s hard-to-trace oil fleet.
The Swedish government will implement new disclosure rules for foreign vessels, specifically targeting tankers linked to Russia’s hard-to-trace oil fleet.

Petrobras signs two agreements in Angola to relaunch its offshore activities

Brazilian group Petrobras formalises its return to Angola with two memorandums of understanding signed with Sonangol and the national oil regulator, targeting offshore exploration without immediate financial commitment.
The Abuja Court of Appeal rejected Malabu Oil & Gas’s lawsuit against Agip, Eni’s subsidiary, by upholding the statute of limitations on the OPL 245 oil block case.
The Abuja Court of Appeal rejected Malabu Oil & Gas’s lawsuit against Agip, Eni’s subsidiary, by upholding the statute of limitations on the OPL 245 oil block case.
Portugal’s Galp expects a production surge in Brazil driven by the offshore Bacalhau field, in partnership with Sinopec, Equinor and ExxonMobil.
Portugal’s Galp expects a production surge in Brazil driven by the offshore Bacalhau field, in partnership with Sinopec, Equinor and ExxonMobil.
North Atlantic has entered exclusive negotiations to acquire the Gravenchon refinery, France’s second-largest, from ExxonMobil in a deal reshaping the industrial landscape of the Seine Valley.
North Atlantic has entered exclusive negotiations to acquire the Gravenchon refinery, France’s second-largest, from ExxonMobil in a deal reshaping the industrial landscape of the Seine Valley.

Shell strengthens position in Nigeria by acquiring TotalEnergies’ stake in Bonga

TotalEnergies sells its 12.5% stake in the offshore Bonga oil field to Shell for $510mn, raising the British group's share to 67.5% in the OML 118 block off the Nigerian coast.
The Trump administration authorizes Chevron to maintain limited stakes in Venezuela while prohibiting oil production and export, marking a decisive shift for the oil sector amid geopolitical tensions with Maduro’s government.
The Trump administration authorizes Chevron to maintain limited stakes in Venezuela while prohibiting oil production and export, marking a decisive shift for the oil sector amid geopolitical tensions with Maduro’s government.
Indonesia Energy announces a ramp-up in its oil assets with a 60% increase in proven reserves and confirms a strategic shift toward gradual energy diversification.
Indonesia Energy announces a ramp-up in its oil assets with a 60% increase in proven reserves and confirms a strategic shift toward gradual energy diversification.
SK Innovation, through its subsidiary SK Earthon, is accelerating investments in offshore oil exploration projects in Southeast Asia, enhancing South Korea's energy security through a regional strategy focused on operational efficiency.
SK Innovation, through its subsidiary SK Earthon, is accelerating investments in offshore oil exploration projects in Southeast Asia, enhancing South Korea's energy security through a regional strategy focused on operational efficiency.

Russia Challenges Adjustment to Price Cap on Its Oil Exports

As Western nations debate an adjustment to the price ceiling on Russian oil, Moscow firmly rejects these measures as market-distorting, citing a lack of significant impact on its current exports.
Carlo McLeod joins the new presidential unit dedicated to hydrocarbons as Namibia centralises oil sector governance under the head of state.
Carlo McLeod joins the new presidential unit dedicated to hydrocarbons as Namibia centralises oil sector governance under the head of state.
Valeura Energy has completed eight wells on Block B5/27 in the Gulf of Thailand, securing stable output and preparing a new investment phase at the Nong Yao field.
Valeura Energy has completed eight wells on Block B5/27 in the Gulf of Thailand, securing stable output and preparing a new investment phase at the Nong Yao field.
Shell recognised Mecpec Trading for its 2023 fuel sales growth and contribution to Singapore's distribution network, with a 23% increase in total volume delivered.
Shell recognised Mecpec Trading for its 2023 fuel sales growth and contribution to Singapore's distribution network, with a 23% increase in total volume delivered.

Advertising