Ecuador’s NOC Declares Force Majeure Amid Indigenous Protests

The indigenous Kichwa community’s protests have prompted Ecuador’s state-run oil company, Petroecuador, to declare force majeure on three additional oil blocks, just days after taking the same action for another block.

On Monday, the production from the three blocks, which were jointly producing approximately 142,000 barrels of oil equivalent, dropped to about 122,500. Despite accusations from the indigenous community of breaching agreements, Petroecudor maintains its openness to dialogue. The company’s production on Monday stood at just over 362,000 barrels.

This development deals another blow to Ecuador’s troubled oil and gas sector. Earlier this year, Ecuador’s energy minister Fernando Santos disclosed that fuel imports had surpassed exports for the first time in over 50 years. Crude and fuel oil exports totaled $2.9 billion during H1 2023, $100 million lower than the $3 billion spent on imports in the same period.

This marks the initial instance where fuel imports have outpaced exports since Ecuador commenced oil exports in 1972, underscoring the vulnerability of smaller economies reliant on oil to price fluctuations. The dependence on oil exports is a common scenario in Latin American economies, further exacerbated by the lack of a clear roadmap in the energy transition. Ecuador, Venezuela, and Colombia heavily rely on oil exports, while Bolivia and Trinidad depend on natural gas.

In August, Ecuadorians voted against oil drilling in Yasuni National Park, a UNESCO-designated world biosphere reserve covering over 1 million hectares. The park is home to the Tagaeri and Taromenani, who live in self-isolation, along with 121 reptile species, 610 bird species, and 139 amphibian species.

Despite Ecuadorian President Guillermo Lasso’s strong advocacy for oil drilling in Yasuni to boost exports, the referendum results dictate that Petroecuador must now abandon operations in the area.