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Woes mount for oil firms in Ecuador

By Kelly HearnCorrespondent of The Christian Science Monitor / February 9, 2006


No one said running a multinational company was easy. But for energy firms that depend on the steady flow of oil and gas from remote, often unstable, parts of the world, just keeping the pipelines secure can be a feat.

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In eastern Ecuador,oil companies face daily threats - from kidnappings of workers to sabotage of installations. Tuesday, hundreds of protesters seized a pumping station, causing state-run Petroecuador to shut down one of its two main pipelines.

In August, oil opponents brought almost all of Ecuador's oil production to a halt. Protesters invaded oil camps, destroyed equipment, and blocked highways, prompting the defense minister to threaten force to stop them. One oil executive says he knows of 19 kidnappings of oil-industry workers in recent years.

Protecting oil installations here calls for robust security measures, but recently publicized contracts mapping oil industry ties to the Ecuadorean military have raised concerns in a country where populism runs deep and three presidents in the past decade have been forced out of office amid popular unrest.

The contracts highlight the troubles facing many multinational energy companies as they seek to diversify drilling sources away from the Middle East and into countries where extractive industries have been linked to environmental and human rights concerns. Critics here say the rarely seen documents - some of which detail company mandates for soldiers to conduct countersurveillance operations on the local population - are proof that Ecuador's military is a private army for oil firms.

"If you cut through the clinical language of the contracts, what you have are agreements that allow American companies to spy on the lawful activities of local citizens in foreign countries," said Steven Donziger, a US attorney working on behalf of groups in the region that are opposed to oil drilling.

Oil companies stress that the contracts are legal, and say they reflect the realities of operating expensive facilities in dangerous places.

The documents, some marked classified and negotiated in secret, were released in late November in connection with lawsuits here, and all have either expired or were nullified by a Dec. 8 decision by the Ecuadorean military.

The military and 16 multinational oil firms, including US-based companies Kerr-McGee, Burlington, and Occidental Petroleum, signed one contract that was dated July 2001 and marked classified. It established "terms of collaboration and coordination of actions to guarantee the security of the oil installations and of the personnel that work in them," to include the control of arms, explosives, and undocumented persons in areas of oil operations. It also instituted communication networks and required military personnel to periodically update oil firms on army activities.

Another contract marked classified and signed in April 2001 by California-based Occidental Petroleum required soldiers "to carry out armed patrols and checks of undocumented individuals" within the company's operating area. It also mandated that soldiers "plan, execute, and supervise counterintelligence operations to prevent acts of sabotage and vandalism."