Ecuador talks with protesters, ups oil production

By Hugh Bronstein

QUITO, Ecuador (Reuters) – Ecuador’s government opened
talks with protest leaders who choked off the country’s oil
exports but officials said that even though production climbed
on Monday, a full recovery for the industry could be a long way
off.

A delegation of about 60 protesters arrived in Quito on
Sunday from the Amazon region, where they had blown up
pipelines and vandalized pumping machinery last week, demanding
infrastructure investment and environmental cleanup.

Ecuador’s exports remain suspended but production has risen
as the army took control of oil fields that had been under
siege, allowing workers to repair damage and some resume
pumping.

Ecuador is the second-largest South American supplier of
oil to the United States after Venezuela and its crisis helped
push U.S. crude oil futures up $2 to more than $65 a barrel on
Friday. Prices held steady above $65 a barrel on Monday.

Output by state oil firm Petroecuador, which has suspended
exports since Thursday, totaled 70,000 barrels per day on
Monday, compared to Saturday’s 33,167 bpd but well under the
201,000 bpd level before the attacks began.

Ecuadorean Energy Minister Ivan Rodriguez told local
television that some oil wells may have been permanently
damaged by the attacks and may be unable to return to normal
activity.

“The preliminary estimate was for normal production to
return in November but that will depend on what we find at the
wells,” he said.

Protest leaders, many of whom are elected officials from
the oil-producing areas, sat down with government officials at
a national police compound in Quito on Monday as dozens of
their sign-carrying supporters gathered outside.

PROTESTERS TO MEET OIL EXECS

The protest leaders also planned to meet later in the day
with state oil company Petroecuador and private petroleum firms
operating in Ecuador.

“The government wants to hear the complaints and then there
will be a meeting that includes the oil companies,” said Diego
Espinosa, assistant to the prefect of Pichincha province who is
mediating the conflict.

The protests have been the biggest challenge to Ecuadorean
President Alfredo Palacio since he was appointed in April after
Congress fired President Lucio Gutierrez for meddling with the
Supreme Court. The government has accused Gutierrez, who is in
exile in Peru, of being behind the unrest.

The government released some of the protesters from prison
on Saturday after they agreed to suspend the violence and start
talks. About 20 of them remain jailed in the eastern provinces
of Sucumbios and Orellana where the disturbances took place,
pending the outcome of the negotiations, the army said.

Protest leaders warned that members of their group remain
on alert in the region and are prepared to renew attacks if
negotiations fail.

The protesters also want the government to renegotiate
contracts with Occidental Petroleum Corp., Petrobras and EnCana
Corp. to increase state participation.

Venezuela will lend Ecuador oil cost-free to cover exports,
Venezuelan President Hugo Chavez said on Sunday without
specifying the volume of the loan.

Rodriguez said he would lead a delegation of Ecuadorean
officials to Caracas on Tuesday to discuss the loan.

Ecuador, which is South America’s fifth-largest crude oil
producer, also plans to import fuel for domestic use and seek a
$400 million loan from the Latin American Reserve Fund to avoid
balance-of-payment problems from the oil stoppages.

Fitch Ratings agency said on Monday that the oil production
interruptions may affect the country’s credit rating.