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Ecuador oil production down from 201,000bpd to 33,000bpd. Expected to take at least untill November to restore production.
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August 21, 2005 01:17 PM ET
Ecuador oil protesters agree to talk
http://news.yahoo.com/news?tmpl=story&u=/nm/20050821/bs_nm/ecuador_dc_10

All Reuters NewsQUITO, Ecuador (Reuters) - Leaders of protests that shut down Ecuador's oil industry were freed from jail after agreeing to halt their attacks and negotiate with the government, officials on both sides of the conflict said on Sunday.

The protesters, who started dynamiting pipelines and vandalizing pumping machinery on Monday, remained on alert while both sides decide on a time and place to start talks.

Demanding jobs and infrastructure investment, protesters invaded oil fields in Sucumbios and Orellana provinces, helping push U.S. crude oil futures by $2 to more than $65 a barrel on Friday.

Many of the protest leaders released late on Saturday are mayors and other elected officials in the region. General Gonzalo Mesa, in charge of army operations in the area, said dozens of protesters remained jailed pending outcome of the talks.

Production by Petroecuador, which suspended exports on Thursday, totaled 33,167 barrels per day on Saturday, compared to 201,000 bpd before protests began.

"We think Petroecuador is ready to help us with some of our requests, the most important of which is that it and the private oil companies operating in the area build roads and do more to reverse the environmental damage they have done," said Edmundo Espindola, mayor of the oil town of Shushufindi in Sucumbios province.

The government is gradually restoring order since it declared a state of emergency in Orellana and Sucumbios on Wednesday, allowing authorities to restrict freedom of movement and association and censor media.

The government says it will take until November to restore Petroecuador's production, which is key to the country's economy. The company said it could take longer to restore production in some fields.

Oil output by private companies has been reduced to nearly zero, Rene Ortiz, president of the Ecuadorean Hydrocarbons Association, told Reuters.

VENEZUELA TO THE RESCUE

Ecuador, with only an eight-day supply of reserves left, is seeking a loan of oil from Venezuela to meet its export commitments.

President Alfredo Palacio received a telephone call from Venezuelan President Hugo Chavez on Saturday promising the loan, whose size is yet to be determined, said Palacio spokesman Andres Seminario.

Venezuelan Foreign Minister Ali Rodriguez said a meeting would be held in Caracas on Monday to study the request and the availability of Venezuelan crude.

Ecuador also plans to import fuel for domestic use and seek a $400 million loan from the Latin American Reserve Fund to avoid balance-of-payment problems from the oil stoppages.

The protests have been the biggest challenge to Palacio since he was appointed in April after Congress fired President Lucio Gutierrez for meddling with the Supreme Court. The government has accused Gutierrez, who is in exile in Peru, of being behind the unrest.

The protesters also want the government to renegotiate contracts with Occidental Petroleum Corp. , Petrobras and EnCana Corp. , to raise state participation.

Ecuador is South America's fifth largest producer of crude oil and, after Venezuela, is the second-largest South American supplier of oil to the United States. (Additional reporting by Alexandra Valencia)