Ecuador’s Energy Minister Ivan Rodriguez suspended the oil drilling operations of Occidental Petroleum on Tuesday May 16. The company has been the target of huge protests by indigenous groups and those opposed to foreign exploitation of natural resources.
The California-based energy giant had operated in Ecuador and at $1 Billion dollars is considered the largest single source of foreign investment in the country. The national oil company Petroecuador was poised to take over operations over the coming weeks.
According to its website, Occidental’s operations in Ecuador’s Block 15—a 494,000 acre chunk of northeast Equdor—tripled production from 2002-2004. At 101,000 barrels per day, the reserve represents 8% of Oxy’s current production, 2% of the company’s worldwide holdings, but, more importantly it also represents 20% Ecuador´s total production.
Last August, under pressure from activists, Rodriguez put Oxy on alert when allegations arose about the allegedly illegal sale of 40% of the company´s Ecuador holdings to the Canadian energy firm, EnCana. Thirty other violations were alleged. Rodriguez gave Oxy "60 days to rectify the problems cited or provide evidence disproving the allegations."
But pressure from indigenous groups did not wane. Angry about the militarization and environmental damage to their traditional lands, indigenous groups continued organizing to kick Oxy out of the country. In March, many groups unified around the joint platform of, "No more Oxy, no more free trade" staged hugh marches and road blocks that paralyzed the country.
Some of those groups, while welcoming the announcement, were cautious to claim victory, noting that the if the US hinges Free trade negotiations on Oxy’s presence in the country, the government could reconsider its decision. The Administration of President Alfredo Palacios has winked at US offers to re-start talks on the Andean Free Trade Agreement, which have been stalled since March of this year.