INDEPENDENT NEWS

Cablegate: Ecuador's Big Environmental Initiative: Keeping

Published: Fri 29 Jun 2007 01:17 PM
VZCZCXYZ0015
OO RUEHWEB
DE RUEHQT #1497/01 1801317
ZNY CCCCC ZZH
O 291317Z JUN 07
FM AMEMBASSY QUITO
TO RUEHC/SECSTATE WASHDC IMMEDIATE 7319
INFO RUEHGL/AMCONSUL GUAYAQUIL PRIORITY 2512
C O N F I D E N T I A L QUITO 001497
SIPDIS
SIPDIS
E.O. 12958: DECL: 06/29/2017
TAGS: EAGR EC EFIN EPET PREL SENV
SUBJECT: ECUADOR'S BIG ENVIRONMENTAL INITIATIVE: KEEPING
THE OIL IN THE GROUND
REF: QUITO 1102
Classified By: DCM Jefferson Brown, reasons 1.4 (B) and (D).
1. (U) Summary: President Rafael Correa is challenging the
world to help Ecuador avoid drilling for oil in one of its
largest and most biodiverse areas of protected Amazon
rainforest, the Ishpingo-Tambocoha-Tiputini (ITT) field in
Yasuni National Park. The GOE wants the international
community to compensate it for half of the profits it
estimates it would earn from ITT development, or $1.75
billion. So far, however, it has not provided any sort of
legal framework for its proposal. It says it would place the
funds into a trust managed by an international body, and sign
agreements that it will not drill for the projected 920
million barrels of heavy crude that lie underground. End
Summary.
THE PROPOSAL
-------------------
2. (U) The GOE officially presented the Oil in the
Ground8 at a June 5 World Environment Day celebration at the
Presidency. The GOE proposed to refrain from developing the
ITT field if the international community would compensate it
for half of the estimated profits resulting from development,
or $1.75 billion (note: the press reported $350 million/year
for the 25 year duration of the project, but this does not
take into account the GOE's estimate that production will not
become profitable until the fifth year of operation). The
showy event at the Presidency included children and
indigenous groups (the ITT is home to uncontacted peoples
such as the Hoarani), and a colorful photo exhibit of
Ecuador's Amazon forests. Cabinet members and even the
President of Petroecuador all signed a large white poster in
support of the initiative.
3. (U) A power point presentation by then Energy Minister
Alberto Acosta listed possible funding sources as "foreign
debt cancellation and trade off: multilateral (IADB, World
Bank), bilateral, Paris Club; government to government
donations, voluntary contributions from civil society,
international NGOs (including conservation and human rights
organizations), and international market placement of
unexploited crude oil certificates." The presentation
illustrated Ecuador's wide biodiversity (more than 600
different species per hectare) and showed photos of the kind
of environmental damage that roads, exploration and drilling
would create. It also gave details about ITT oil: the field
currently contains an estimated 920 million barrels * more
than 20% of total Ecuadorian reserves. Interested investors
include the Chinese, the Brazilians, and Venezuelans.
4. (U) The GOE says it will place donated funds into a trust
managed by an international body, and sign agreements that it
will not develop the ITT. Any interest generated will
supposedly be used to fund social development networks. The
government plans to give the initiative one year to succeed
* but if funds are not raised by that time, it says it will
move forward with development.
SAVE THE ITT, SLOW GLOBAL CLIMATE CHANGE
--------------------------------------------- ---------------
5. (U) At a separate event on June 14, "Climate Change,
Kyoto y Alternatives to Development," Ivonne Ramos of NGO
Accion Ecologica said forgoing development of ITT would help
Ecuador meet its Kyoto Protocol obligations. She said that
Ecuador's clean development initiatives were not numerous,
but included 230 successful hydroelectric projects and
efforts to address emissions (the Quito municipality
participates in the UNEP-administered and EPA-sponsored Clean
Fuels Partnership through its organization CORPAIRE). She
concluded that avoiding development would be a huge stride,
and called the project "the only initiative by a country of
the south" to propose a "concrete" remedy to global warming.
Economist Carlos Larrea from the Universidad Andina Simon
Bolivar added that if development of ITT (and the thermal
refinery necessary to distill its heavy crude) proceeds, the
net financial cost to the rest of the world in terms of
climate change would be greater than Ecuador's profit.
Acosta's presentation asserted the same, estimating that
exploitation of the ITT would release 108 million tons of
carbon into the atmosphere.
COMMENT
--------------
6. (C) The $1.75 billion question with regard to Correa's
ITT proposal is: what guarantee will the GOE provide that it
will not develop the field? The idea is innovative (perhaps
inspired by carbon credits), but to the best of our
knowledge, the GOE has not yet developed any legal framework
to assure the international community that it will forgo
development. We question whether the GOE has the legal
expertise, organizational ability, or long-term political
will to see the project through. The chief proponent of the
proposal, former Energy Minister Acosta, resigned on June 14
to run for the Constituent Assembly. Meanwhile,
Petroecuador's President, Carlos Pareja has been actively
pushing for development of the ITT fields (reftel). In an
ironic twist, the same day the GOE unveiled its Keep the Oil
in the Ground proposal, Petroecuador applied for visas for a
delegation to travel to Washington to meet with possible
U.S.-based developers of the ITT field. Even so, the GOE
proposal may attract some attention * the German DCM
commented to EconCouns a couple of months ago that he was
skeptical that the GOE would follow through with its
commitment, but he more recently said that the German
government may actually consider the proposal; Norway has
also reportedly shown some interest. End comment.
JEWELL
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