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Protesters, troops clash as oil strike hits Ecuador

Posted on: Wednesday, 8 March 2006, 14:06 CST

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)

Source: REUTERS

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