Vandalism, road blocks could lead Ecuador to soon halt oil pumping

Stephan Kueffner June 27, 2022

(Bloomberg) — Ecuador’s oil production is likely to halt completely within 48 hours if road blocks and vandalizing of oil wells continue, the Energy Ministry said in an emailed statement.

Anti-government protests launched June 13 risk shutting down the former OPEC member’s oil industry “due to the acts of vandalism, takeover of wells and closing of roads, supplies and diesel necessary to maintain operations has not been possible.”

As of Sunday, production has dropped more than 50% below the average 520,000 barrels a day Ecuador extracted from its Amazon territory before the protests began. A total 1,176 oil wells have been forced to stop pumping.

Led by umbrella indigenous organization CONAIE, demonstrators are demanding higher fuel subsidies, a moratorium on new oil and mining projects, and a slowdown of moves to privatize state assets amid broader criticism of conservative President Guillermo Lasso’s plan to overhaul the economy with support from the International Monetary Fund.

Ecuador had preventively already declared force majeure on oil contracts to avoid penalties from being unable to ship scheduled deliveries. It’s the second force majeure since Dec. 12 after erosion threatened to snap its two oil pipelines. Oil production dipped to a low of 101,700 barrels during that event, the lowest since at least January 2010. 

The problems with production have cut into the financial windfall the current high oil prices are providing the administration with. 

Despite domestic and international calls on Sunday, including from Pope Francis, for the government to negotiate with indigenous leaders, CONAIE President Leonidas Iza has refused offers to discuss the organization’s demands. 

Later Sunday, lawmakers are scheduled to vote on an opposition attempt to impeach Lasso. According to statements from several political parties, this is likely to fail.

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