The challenges Ecuador faces to close oil block ITT

Closing Ecuador’s oil block 43, also known as ITT, appears to be more complicated than expected, not only for economic reasons, but also for legal reasons and the licenses that will be required.

Environment minister Inés Manzano said the closure and dismantling of all oil infrastructure requires an environmental license.

To obtain the license, prior, free and informed consultation must be carried out with the indigenous communities that live in the area where ITT is located, the minister said.

Kichwa and Waorani communities live in the area of the oil block and they oppose the closure. However, the results of the prior consultation are not binding, according to the current law, although the opinions should be taken into account for possible reparations.

The consultation cannot be carried out at this time because the national assembly has not approved a law on prior consultation, and the country's constitutional court last year declared unconstitutional a decree signed by then-president Guillermo Lasso that allowed prior consultation for extractive projects while the assembly approved the respective law.

With that decision, the prior consultation for ITT was put on hold, Manzano said in a television interview.

The official asked the constitutional court to act in accordance with the law and provide the mechanisms to comply with the closure approved by Ecuadorans in a referendum.

In the vote in August last year, some 5.5mn Ecuadorans, or 59% of voters, chose to close the oil block.

Part of ITT is within the Yasuní national park, a highly biodiverse area of almost one million hectares.

According to data from state oil company Petroecuador, ITT currently produces around 55,000b/d and its infrastructure occupies 80ha.

On August 28, the government of Daniel Noboa reported that it had shut down the first well in the block, Ishpingo B-56, which will result in a progressive drop in production.

Petroecuador last year estimated that the country would lose between US$800mn and US$1.2bn per year from the closure of the block.

CLOSURE PROCESS

Last week, at a press conference in Quito, the president of the Kichwa communities of Aguarico, Lauro Papa, said the group would file an injunction request with the constitutional court to demand respect for their rights since the referendum should only be held among people who live in the area.

Other indigenous organizations in the Amazon, however, support the closure of the oil block.

"The decision to close the project should be reversed because the referendum should only have been held in the provinces of Orellana and Sucumbíos, which is the area of influence of the project, and not in the entire country," Nelson Baldeón, a private energy geopolitics consultant, told BNamericas.

The dismantling of the block, as ordered last year by the constitutional court, should have occurred within a year of the results of the referendum, a deadline that expired on August 31.

On August 20, President Noboa asked the constitutional court to review the actions implemented so far and evaluate the mechanisms proposed to address the challenges of the closure process.

According to a preliminary schedule drawn up by Petroecuador, the closure and plugging of the block's 246 wells would be carried out by December 2029. This year, 10 wells would be closed.

The clearing of surface facilities at the wells would take place between August 2025 and August 2030, the removal of rock and debris between August 2027 and August 2032, and the revegetation and monitoring of areas between August 2029 and August 2034.