Ecuador signs controversial oil-pipeline contract


Despite fierce criticism, the Ecuadorian government has signed a contract for construction of a 310-mile (500-km) crude-oil pipeline that will run in part through the Mindo Nambillo Range, an area of prized state and private ecological reserves.

The Energy Ministry signed the $1.1 billion contract on Feb. 15 with Heavy Crude Oil Pipeline (OCP), which is owned by a consortium of companies operating in the Ecuadorian Amazon—Occidental Petroleum, Kerr McGee, Repsol-YPF, Agip, Alberta Energy, Pérez Companc and Techint. The work, however, is subject to the approval of a forthcoming environmental-impact statement.

Government officials and OCP have promised to safeguard the environment using the latest technology. But environmental groups and residents of Mindo vow they’ll take legal action if the pipeline route isn’t shifted.

Under a company plan approved by Ecuadorian President Gustavo Noboa, an 8.5-mile (13.6-km) portion of the pipeline will follow a ridgeline separating a forest reserve in the upper watershed of the Guayllabamba River and the Mindo Nambillo forest reserve.

The government acknowledges that a 2.2-mile (3.5-km) stretch of this section goes through highly sensitive cloud forest in the state-owned Mindo Nambillo reserve, located just 16 miles (25 kms) northwest of Quito.

“The rest is an area of secondary forest that already has been subjected to timber cutting,” says Liszett Torres, environmental-protection undersecretary for the Energy Ministry. (See Q&A, Page 12.)

U.K.-based BirdLife International and the Ornithological Corporation of Ecuador (Cesia) rank the Mindo among the most important bird habitats in South America. Popular to ecotourists, the area is home to 450 species of birds, 30 of them endemic, five of them threatened, and one—the Black-breasted Puffleg, a hummingbird (Eriocnemis nigreivestis)—near extinction.

“The route proposed by the OCP consortium will cut through a recently surveyed site where the Black-breasted Puffleg was found and is suspected to breed,” Michael Rands, BirdLife International’s director and chief executive said in a prepared statement this month. “[The pipeline] will destroy much of the remaining vegetation along Cruz Loma ridgetop and will probably lead to the extinction of the species at that site.”

Guido Rada, Cesia’s executive director, warns the project could affect a larger area than the government describes because people will use the right of way to hunt and log on hitherto inaccessible land.

These incursions alone, he says, could threaten such species as the spectacled bear and puma. Paul Greenfield, an ornithological researcher who lives in the Mindo area and belongs to a group called Committee for a Lesser-Impact Route, agrees. “The route would affect the forest reserve on both sides and two river systems...We are worried about the overall [impact] on species.”

But the government considers the new line crucial to Ecuador’s economy. Crude accounted for 44% of Ecuador’s exports last year. Officials say once the pipeline opens in 2002, oil production will rise from last year’s 145 million barrels to 190 million barrels, and eventually 250 million barrels, annually. Energy Minister Pablo Terán warns that if the pipeline is not built, Ecuador within four years will be forced to become a net importer of oil.

Petroecuador, the state-owned oil company, hopes to promote exploration by partnering with foreign oil companies, but the pipeline is seen as a precondition. Ecuador’s sole pipeline currently, the TransEcuadorian Oil Pipeline System (Sote), moves 390,000 barrels a day. This is not sufficient to handle the oil ready to be pumped—let alone new finds—officials say. And the existing line carries light, high-quality crude from Petroecuador fields. Lacking another line, lower-quality crude from private fields must be mixed with the lighter oil in the Sote line at a high cost to Ecuador.

The government last year authorized proposals for two new pipelines. One resulted in the contract signed last month. The other, from Williams Cos, called for a route south of Quito. But in December Williams pulled out, saying there would never be enough crude to justify two new pipelines.

Environmentalists, ecotourism organizers and Mindo residents favor the southerly route for the new pipeline. But the government says that route has drawbacks. Among other criticisms of the southerly route is that most of it follows the existing Sote line, posing extra risks in the event of an accident or terrorist attack.

Vicente Pólit of the Ecuadorian Committee for the Defense of Nature (Cedenma), an association of environmental groups, says other alternatives must be explored if the southerly route is unsatisfactory. “It is of vital importance for the country that the Mindo area not be affected, not even eventually,” Pólit says. “Ecological groups will use all legal means to stop construction.”

Proponents of the northerly route counter that minimum-impact construction and high-tech monitoring will protect the environment. Says Miguel Áleman of Entrix, the company doing the environmental impact study: “Using the latest technology and applying the law correctly, any type of environmental problem can be overcome.”

- Mercedes Alvaro

Miguel Áleman
Ecuador Manager
Quito, Ecuador
Tel: +(59 39) 724-753
Paul Greenfield
Committee for a Lesser-Impact Route
Mindo, Ecuador
Tel: +(59 32) 464-068
Manolo Morales
Committee for the Defense of Nature and the Environment (Cedenma)
Quito, Ecuador
Tel: +(59 32) 225-1446
Guido Rada
Executive Director
Quito, Ecuador
Tel: +(59 32) 464-539
Liszett Torres
Undersecretary of Environmental Protection
Energy Ministry
Quito, Ecuador
Tel: +(59 32) 550-018; 554-276
Documents & Resources
  1. For BirdLife International background briefing, map and bird illustrations: Link