QUITO, Ecuador-The rising tide of nationalism presently
sweping Latin America has created an impasse between the
Government of this impoverished country and the developers of one of the most potentially lucrative petroleum finds in recent years.
The new oil fields were discovered by a joint Gulf Oil Texaco
group in the Ecuadoran jungles south of the Colombian border and east of the lofty Andean Cordillera that divides this land.
After sinking 11 wells and finding high-grade, low sulphur petroleum in 10 of them, the Gulf-Texaco ground, has offered to lay a pipeline from the Aguarico River area across the Andes at a level of 13,500 feet down to the Pacific Coast port of Esmera!das just north of the equator.
According to petroleum experts here, the pipeline, laid above ground, should cost no less than S1.25-million, while the cost of continued exploration could bring the Gulf-Texaco outlays to $200-million be fore the first drop of oil reaches Esmeraldas.
Operation Delayed
Recently, the Gulf-Texaco group and a number of other oil prospectorswere moving into east central Ecuador, but progress there must await the suc cess of missionaries in explain ing the strange machines and operations of the oil hunters to the Aucas and Jivaros, two of the most savage Indian tribes ever encountered in Latin America. The two tribes o head hunters have never bee pacified.
Nevertheless, the oil experts now believe that what was formerly considered a southern extension of the recent rich oil strikes in Colombia may prove to be the reverse.
Unlike Venezuelan oil, which has to be desulphurized to meet new anti-pollution standards set by’ many United States communities, Ecuadorian oil has to pass through the Panama Canal to the United States East Coast, which would be impossible for the huge modem tankers.
Finally, the oil here could compete with the potential flow from recently discovered Alaskan fields not operated by the petroleum companies working here.
But the problems facing the oil concerns here do not stem from technical or marketing factors.
Product of Junta
For one thing, the 90-day-old Government of President Jose Maria Velasco Ibarra notes that the five-year concession granted Gulf-Texaco in March of 1964 was the work of the military junta then in power here end thrown out in March, 1966.
The Ecuadorian Government further observes that the agreement did not cover any pipeline rights, which President Velasco claims should be the property of his country. He also questions the 50-50 profits split in the expiring contract.
Equally important, the Ecuadorian government wants the original 1.4 million hectares (2.4 acres each) reduced by 900,000 hectares. By Ecuadorian law, the concessions must be made in a rectangular or square mass end his precludes any “gerrymandering of concessions, the Government has asserted consequently.
Renegotiation Sought
The Government is seeking to renegotiate Gulf-Texaco’s operating contract. While claiming al their rights in the original contract, the oil group has agreed to renegotiation.
The rub, however, is that the new Government is in the midst of a political “revolving door,” as officials seem to be appointed one day and resigning the next.
While the appointments and resignations are not connected with the petroleum problem, it has prevented meaningful talks and will probably continue to do so for many months.
Some sources familiar with the impasse believe the Government wants to solidfy itself before opening serious negotiations because of the sensitive subject of Peruvian licensed foreign oil companies now drilling in areas considered here to be national territory.
For many years, the dispute with Peru over lands in question that were given this land’s powerful southern neighbor by the so-called Rio Protocol of 1942, has been one of the few unifying subjects in this nation.
Should it be proven that foreign oil concerns were indeed working in the disputed territory under Peruvian license, few here doubt that it would cast a shadow over the entire foreign petroleum scene.
Meanwhile, this poor country of largely illiterate Indians will have to wait for the prosperity the transistor radios tell them is hidden beneath their feet.
