Work Halted on OCP Pipeline in Ecuador

Work has been halted on the $1.3 billion pipeline in Ecuador after trees in a forest outside Quito were damaged during construction. The Environment Ministry suspended pipeline construction near the Mindo-Nambillo protected forest, an important site for bird-watching that has been the source of a dispute with activists who don't want the project built there.

The Ministry ruled that pipeline builder OCP Ecuador SA damaged plants and habitats for local species while installing an apparatus to transport pipe to an ecologically sensitive area near Mindo, outside Quito.

"It is not our intention to put the license or contract at risk. But that means all the norms in the license must be met," Environment Minister Edgar Isch said. Isch took office two weeks ago, appointed by the country's new president, Lucio Gutierrez.

OCP's president, Bernardo Tobar, said that construction met environmental standards and would not be delayed by the suspension. Tobar said the company hopes to complete work near Mindo by the end of February.

This new pipeline will have the capacity to transport 450,000 bpd from Amazon oil fields to a coastal port. It is expected to start operations in June.

Isch also said he wants to discuss a plan to charge OCP a fee for using native forest during construction. He would charge the firm $2 for each cubic meter of forest used or destroyed, as the country has done for other projects. Tobar said he was not aware of plans to charge this fee.

Partners in OCP are EnCana, Agip, Occidental Petroleum, Perenco, Repsol, Perez Companc and Techint.