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Ecuador's state-run oil company, Petroecuador, has declared force majeure on three more oil blocks due to protests by the indigenous Kichwa community, just days after doing the same for another block.
The three blocks were jointly producing a total of about 142,000 barrels of oil equivalent before production fell to about 122,500 on Monday.
The indigenous community has accused the company of breaching agreements, though Petroecudor has said it remains open to dialogue. Petroecudor produced just over 362,000 barrels on Monday.
The latest development comes as yet another blow to Ecuador's beleaguered oil and gas sector. Earlier in the year, Ecuador’s energy minister Fernando Santos revealed that fuel imports have now surpassed exports for the first time in more than 50 years.
Crude and fuel oil exports clocked in at $2.9bn during H1 2023, $100m lower than imports which cost $3bn during the same period.
This marks the first time fuel imports have exceeded exports ever since Ecuador started exporting oil in 1972, highlighting the vulnerability of smaller economies that rely heavily on oil to oil price swings. Latin American economies generally depend on oil exports, a situation that is exacerbated by a lack of a clear roadmap in the energy transition.
The economies of Ecuador, Venezuela, and Colombia rely heavily on oil exports and revenues, while Bolivia and Trinidad depend on natural gas.
Back in August, Ecuadorians voted against drilling for oil in Yasuni National Park, home to the Tagaeri and Taromenani who live in self-isolation. Yasuni, designated a world biosphere reserve by UNESCO in 1989, encompasses a surface area of over 1 million hectares (2.5 million acres); 121 reptile species, 610 species of birds and 139 amphibian species.
Ecuadorian President Guillermo Lasso has been strongly advocating for oil drilling in Yasuni in a bid to boost oil exports. However, the results of the referendum mean that Petroecuador now has to abandon operations there.
By Alex Kimani for Oilprice.com
Alex Kimani is a veteran finance writer, investor, engineer and researcher for Safehaven.com.