Intro: Ivanhoe Energy, allegedly aided by the brother of Ecuadorean President Rafael Correa, has obtained concessions to explore the potentially vast Pungarayacu oil-field in the Ecuadorean Amazon. Scant attention is being paid to the environmental impact or the effect on local people.
Ecuadorian tribal leader delivers opposition statement to company headquarters
A surprise guest met representatives of Canadian-based Ivanhoe Energy this morning at its Calgary headquarters to denounce the company’s oil operations in Ecuador. Rene Chimbo, President of the Kichwa indigenous people of Rukullakta, Ecuador, presented a letter adamantly rejecting External link the company’s drilling plans slated for Rukullakta-titled territory.
The letter emphatically rejects any planned oil operations on Rukullakta lands without community consent, and denounces the “attitude of Ivanhoe Energy and subcontractors for trying to divide our communities.” In the letter, the community also vowed to “raise its voice and spears in defense of our territory and forest.” Chimbo personally delivered the letter to senior Ivanhoe management on behalf of 17 Rukullakta communities representing some 8,000 people.
Ivanhoe obtained the 426 square-mile Block 20 oil concession in 2008, which contains the massive Pungarayacu heavy oil field, estimated to hold between 4.5 to 7 billion barrels of oil. A major portion of the field lies beneath Rukullakta’s legally titled land.
The heavy crude project would be the first of its kind in Ecuador. First thought to be a mining project similar to the tar sands in Alberta, Canada, Ivanhoe holds patented technology that it claims could upgrade the extra heavy 9-10 degree crude to lighter, more expensive oil. Ivanhoe has yet to prove the technology is commercially viable, however, and is not currently utilizing it in its operations.
“We have repeatedly expressed our opposition to Ivanhoe in Ecuador, but the company does not listen,” said Chimbo. “Instead, they illegally enter our territory and use intimidation tactics to threaten us. We were forced to travel all this way to tell them face to face that we will not let them drill on our lands.”
The project has been plagued by environmental concerns and controversy surrounding its contract with the Ecuadorian government. The region that encompasses Block 20 is comprised of fragile ecosystems, with several watersheds critical to local communities for sustenance and economic activity such as tourism. Ecuador’s National Institute has declared the watershed of the Misahualli River, which bisects the block, a “Sacred Valley for Culture and Patrimony.” The area has also been home to indigenous peoples for thousands of years, some of whose cultural remnants remain on dozens of petroglyphs that date back to 10,000 years BC.
Part of Block 20 is located in the Sumaco Biosphere Reserve, a UNESCO (United Nations Educational, Scientific and Cultural Organization) site and one of the most pristine ecological protected areas in Ecuador. The Sumaco Reserve is thought to be a hotspot for endemism due to its wide range of altitudes and microclimates and its inaccessibility by road, resulting in an unusually high number of unique species.
“This is the last place that anyone should be drilling for oil, let alone a company with unproven technology and little capital for a project with such a heavy environmental footprint,” said Kevin Koenig, Ecuador Program Coordinator for Amazon Watch. “Company shareholders need to pay attention to the fact that this company is on the verge of a major human rights and ecological liability. Ivanhoe needs to understand that this project will never move forward without the consent of Rukullakta, and would do well to heed Rukullakta’s call to abandon its drilling plans.”
Ivanhoe received the massive block in a no-bid contract with the questionable aid of the brother of Ecuadorian President Rafael Correa. A tell all book and a lawsuit have charged Ivanhoe and the President’s brother with engaging in bribes and illegal gifts in exchange for the sweetheart contract. Ecuadorian law allows a no-bid contract for companies that have unique, patented technology. The fact that the company is not using such technology is raising questions whether it was a ruse to instead search for the more highly valued light crude.
The company’s falling stock price, lack of access to capital, and cash on hand shortages raise questions as to whether the company has necessary resources to manage environmental impacts and contingency plans given the highly complex nature of invasive drilling in a fragile and culturally sensitive environment. A thorough risk assessment of the company’s operations in Ecuador can be found here External link.
Ivanhoe’s first well, outside of Rukullakta but within the Pungarayacu field illustrates the company’s weak environmental responsibility. A new video shows contamination and poor control of drilling wastewater External link being drained into local tributaries.