Ecuador's Oil: Another Win for the Andean People
Demonstrators march in Quito on May 9 during a protest against the US oil company Occidental.
Ecuador moves against US oil giant
By Alonso Soto - Rueters
Tue May 16, 3:47 PM ET
Ecuador began on Tuesday to take over operations of U.S. oil giant Occidental Petroleum Corp, the latest move in Latin America against foreign energy producers after nationalization in Bolivia and growing state intervention in Venezuela.
Ecuador revoked Occidental's contract on Monday after accusing it of transferring part of an oil field without authorization. Occidental says it has complied with its obligations and still hopes to settle.
Occidental share prices fell by 2.35 percent on Tuesday as company executives held talks with Ecuadorean energy officials, who were escorted by police into the company's Quito headquarters.
President Alfredo Palacio has been under pressure from Indian groups in the oil rich Amazon to expel Occidental, who accuse the firm of exploiting natural resources with no benefit for Ecuadoreans. Occidental had also become a lightening rod for criticism of U.S. "imperialism."
The surprise contract cancellation came a little more than two weeks after leftist President Evo Morales of Bolivia, the country's first indigenous president nationalized the industry and ordered the military to occupy natural gas fields.
Bolivia's move sparked Wall Street fears that leftist Venezuelan President Hugo Chavez, a self-styled revolutionary famous for his anti-U.S. rhetoric, was pushing his neighbors in a campaign to tighten state control over natural resources.
Ecuador's top trade negotiator said the oil field takeover had prevented free trade talks from the United States from going forward.
"We are disappointed by this decision and seeking for clarification with the government of Ecuador," said Kurtis Cooper, spokesperson for State Department when asked about the Occidental case.
Analysts warned against pointing the finger at Chavez as the culprit in Ecuador and said moves against foreign producers were often due to high energy prices worldwide.
"Each country has its own reasons to do what it is doing," said Rob Cordray, director of Houston consulting group PSC Energy. "This is something that is happening everywhere, not only in Latin America. Oil companies are profiting a lot and the governments want to get a bigger part of it."
Ecuador on Tuesday ruled out any nationalization of the oil industry. Officials say the country will receive an extra $100 million per year in oil revenues due to the Occidental contract cancellation.