Ecuador could lose $1.2 billion in annual oil income should a vote to stop production in a major oil block prove successful, the country's energy ministry said on Tuesday.
Ecuador's state-run oil company Petroecuador currently produces oil out of three fields from the block in question-the 43-ITT block in the Yasuni area of the Amazon-where it has operated for seven years.
The issue of banning oil production in Block 43-ITT made it on the ballot from a referendum that was proposed a decade ago, but approved by a constitutional court only last month. Ecuadoreans will be set for a vote in August.
"The backers of the request for crude to remain underground made it ten years ago when there wasn't anything. 10 years later we find ourselves with 55,000 barrels per day, that's 20 million barrels per year. At $60 per barrel, that's $1.2 billion," Energy Minister Fernando Santos said on local radio, adding that it could "cause huge damage to the country."
Ecuador's oil industry has struggled over the last decade, according to OilPrice.com's Matthew Smith.
A combination of poorly constructed and corroded infrastructure, natural disasters, and frequent civil unrest are causing numerous production outages that are weighing on the economy and fragile government finances. Violent protests have rocked the small South American country of 18 million with worrying frequency over the last eight years. The civil disturbances, sparked by fuel price hikes and a spiraling cost of living, along with environmental incidents in Ecuador's Amazon are impacting oil industry operations and causing production outages, Smith wrote in March.
Ecuador is an oil-dependent economy in which petroleum is responsible for 58% of its exports by value and 4% of gross domestic production.
By Julianne Geiger for Oilprice.com
Julianne Geiger is a veteran editor, writer and researcher for Oilprice.com, and a member of the Creative Professionals Networking Group. More
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