Protesters, troops clash as oil strike hits Ecuador

By Alexandra Valencia

QUITO, Ecuador (Reuters) – Ecuadorean troops fired tear gas
on Wednesday to clear out oil facility strikers who have cut
vital crude production at Ecuador’s state oil firm by nearly
three-quarters.

Petroecuador’s output was reduced by 72 percent to 55,696
barrels per day (bpd) after contract workers downed tools on
Tuesday to demand full-time jobs and delayed payments, a
company official said on Wednesday.

The strike is the latest dispute to hit Ecuador’s oil
industry and embattled President Alfredo Palacio. Last month,
protesters forced a cut in exports after briefly shutting two
pipelines to demand a bigger share of oil revenues.

Petroecuador, which normally produces around 200,000 bpd of
crude, has warned that production could come to a full stop if
the strike was not over by Wednesday.

Trying to control the protest, the government on Tuesday
declared a state of emergency in three Amazon provinces and
limited constitutional rights such as the right to public
gatherings.

Security forces fired tear gas to clear out contract
workers gathered near an oil facility in the Amazon city of
Lago Agrio, 118 miles east of Quito, the company said. Troops
were also controlling affected Petroecuador oil wells.

“We have no communication with Petroecuador at the moment,”
said Luis Ubidia, a union leader. “The workers were carrying
out a peaceful protest when the army started shooting tear
gas.”

Palacio, who came to office after Congress fired his
predecessor in April last year, could face more oil protests as
poor regions press his weak government into concessions before
presidential elections in October.

Small groups of union workers and students also clashed
with police in Quito to demand the government quits free trade
negotiations with the United States and raises the minimum
wage.

The government plans to release $20 million on Friday to
pay delayed salaries to the nearly 4,000 contract workers who
went on strike, the Economy Minister Diego Borja told
reporters.

Petroecuador’s cumulative losses amount to 156,992 barrels
and the strike halted operations at 291 oil wells, the company
said.

PETROECUADOR IN CRISIS

Ecuador is South America’s fifth-largest oil producer, with
an average production of around 530,000 bpd.

Experts say Petroecuador’s already ill financial situation
has been worsened by the recent string of protests.

“This is a company on the brink of collapse,” said Ramiro
Narvaez, an oil analyst and professor at Ecuador’s branch of
the Latin American Faculty of Social Sciences. “This long
crisis is starting to show its consequences.”

The company’s production has dropped to 71.94 million
barrels in 2004 from 117.89 million in 1993, according to the
Central bank.

“Since nobody seems to be in charge of the company at the
government level, nobody wants to do any serious reforms to
Petroecuador, even when it is faced with serious problems,”
said Roger Tissot, Latin American analyst with Washington-based
consultancy PFC Energy.

(Additional reporting Alonso Soto)