Thursday, September 27, 2007

Ecuador Holds off Drilling in Hopes of Donations

BBC News - Ecuador Seeks Oil 'Compensation'
Environmental News Service - Ecuador Seeks Compensation to Leave Amazon Oil Undisturbed

Ecuador President Rafael Correa is waiting to see if foreign donors will be willing to pay $350 million a year to prevent oil companies from drilling in Ecuador’s Yasuni National Park. He has imposed a one-year moratorium on oil drilling in order to spur donations. Correa announced the initiative earlier this year in a novel attempt to recoup some of the oil revenues that would be lost by the lack of oil exploration in the national park, which has been designated a UN Biosphere Reserve site. Yasuni contains some of the greatest plant and animal diversity found in the Amazon rainforest.

It is estimated that there are just under a billion barrels of untapped oil in Yasuni, which would make it the country’s largest undeveloped oil reserve. The $350 million that Correa seeks to prevent exploration would make up about half of the estimated annual revenues of the oil field. Currently, about 40% of the Ecuadorian government’s budget comes from oil revenues, underscoring the fiscal importance of the eventual outcome of Correa’s plan.

Some have suggested writing off part of Ecuador’s $15 billion in external debt in order to cover the cost of Correa’s demand. To hedge its bets, Ecuador has signed exploration agreements with Petrobras of Brazil and other oil companies of Venezuela, Chile, and China. Complicating matters for Correa, several indigenous peoples also live within Yasuni and claim it as their ancestral land.

Several countries, such as Germany, Norway, and Italy, have taken steps to consider the Ecuadorian proposal. The World Bank has also consulted with other international organizations about the idea. Still, others are critical, noting that Ecuador is demanding cash to refrain from drilling in what should already be a protected envrionmental area.

1. Is Peru's offer not to exploit the Yasuni Rainforest a good opportunity for developed countries to exercise debt forgiveness?

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