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Ecuador Calls State of Emergency after Oil Strike

Posted on: Wednesday, 8 March 2006, 00:55 CST

By Alexandra Valencia

QUITO, Ecuador (Reuters) - Ecuador declared a state of emergency in three provinces on Tuesday after a strike by 4,000 contracted workers cut output at state oil firm Petroecuador and the company warned it could halt full production by Wednesday.

Petroecuador production was down 34 percent to 132,000 barrels per day after contract workers in two Amazon provinces put down their tools on Tuesday to demand full-time positions and protest work terms, a company official said.

"A state of emergency was called in the provinces of Napo, Orellana and Sucumbios," presidential spokesman Enrique Proano told reporters.

A state of emergency limits constitutional rights such as freedoms of association and to right to public gatherings.

The strike is the latest conflict to hit Ecuador's oil industry. Last month protesters forced a cut in exports after briefly closing down two key pipelines to demand a fairer share of the nation's oil revenues.

Petroecuador warned that its production could be completely cut off by Wednesday without an end to the strike.

"We estimate accumulated production losses of 197,545 barrels by 6 a.m. (1100 GMT) Wednesday, which is equivalent to $9.8 million and could mean a total halt of the company's operations," the company said in a statement.

Ecuador, South America's fifth-largest oil producer, usually has output of around 530,000 bpd and Petroecuador produces an average of 200,000 bpd of crude. Turmoil in the country's oil sector has unsettled global oil markets already fretting over supply disruptions.

A leader of the contract workers, Remigio Sornoza, said they were holding talks with Petroecuador officials to end the strike. In its statement, Petroecuador said it owes around $51 million to the subcontracting companies that hire the workers.

"The workers have shut down electricity in all the oil fields and that is causing a gradual drop in production," said a high-ranking company official who asked not to be named.

Contract workers complained about late payments and demanded the state company give them full-time positions.

"All our 4,000 workers are on strike in Orellana and Sucumbios," Sornoza, president of the contract workers union, told Reuters by phone. "We generate the country's wealth and it is not fair that we are treated this way."

He said workers went on strike early Tuesday.

Oil contract workers offer services ranging from oil field security to heavy machinery repairs and drilling operations.

Petroecuador, which is suffering from financial problems, has warned that production could stall this year due to lack of funds to develop extraction and exploration projects.

Source: REUTERS

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