August 20, 2005

Petroecuador strains to hike output after protest

By Carlos Andrade

QUITO, Ecuador (Reuters) - Ecuador's oil company
Petroecuador struggled on Saturday to increase production and
repair damage from protests in two Amazon provinces that have
helped push up world energy prices, it said.

"There has been serious damage and we still can't get into
all of the oil fields," a company spokesman said.

Production by the state-owned company, which suspended
exports on Thursday, totalled a rate of 33,167 barrels per day
on Saturday, compared to 201,000 bpd before protests began on
Monday in the provinces of Orellana and Sucumbios, he said.

The disturbances helped push up U.S. crude oil futures by
$2 to over $65 a barrel on Friday.

The government says it will take until November to restore
Petroecuador's production. Oil output by private companies has
also been badly hit.

After Venezuela, Ecuador is the second largest South
American supplier of oil to the United States. It is the
continent's fifth largest producer of crude.

Protesters invaded oil fields on Monday, smashing equipment
and blocking highways in demanding that foreign oil companies
pay for infrastructure and provide more jobs.

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


Isolated acts of vandalism continued on Saturday, including
attacks on small pipelines. But army troops and police have
been gradually restoring order since the government declared a
state of emergency in the two provinces on Wednesday, the
spokesman said.

Demonstrators have smashed Petroecuador generators and
computers, the spokesman said. "We still have problems in the
big fields," he added.

The government arrested the highest profile protest leader,
the elected prefect of Sucumbios, Guillermo Munoz, on Friday.

Women protesters staged a peaceful march on Saturday in the
jungle city of Lago Agrio local media reported.

Under the emergency, authorities can restrict freedom of
movement and association and censor media in the area.

So far Petroecuador has only been able to restart output in
newer fields using mechanical pumps which usually only account
for about 10 percent of the company's output. Damage to
generators will keep output at larger fields with electrical
pumps below normal until November, the spokesman said.

Most roads to oil fields are still blocked with tires,
stones, machinery and holes smashed in the tarmac by
protesters, the spokesman said.

Demonstrators also want the government to renegotiate
contracts with Occidental Petroleum Corp., Petrobras and EnCana
Corp., to raise state participation.

Ecuador is seeking a loan of oil from Venezuela to meet its
export commitments. It will also import fuel for its domestic
needs and seek a $400 million loan to avoid balance-of-payment
problems from the oil stoppages.