Ecuador Confirms Another $20 Billion in Oil Reserves

Ecuador's proven oil reserves grew recently with the announcement by Vice-President Jorge Glas that Block 43 in the Amazonian province of Orellana counts on 1,672 million barrels of oil, an increase of 82 percent over previous findings.

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U.S. oil engineering company Ryder Scott conducted an evaluation and confirmed the amount of proven reserves. The new certification means that the country as a whole now has nearly 4 billion barrels in proven reserves.

At current prices, the additional reserves will translate into US$19.5 billion in revenue.

Block 43 is one of Ecuador's key oil deposits in the Amazon and oil extraction there has been the subject of controversy as the block is located inside the Yasuni National Park, considered one of the most biodiverse areas on the planet.

Ecuador originally proposed keeping the oil in the ground but an appeal to the international community for contributions to prevent extraction failed after donors pledged a small fraction of the amount needed.

In late 2013, the government opened a small portion of the Amazon to oil extraction with a commitment to minimize any environmental consequences.

The state oil company Petroamazonas is tasked with the project and has committed to extracting in a responsible manner. The company won an environmental prize last year over from London's Energy Institute for its efforts to mitigate the environmental impact of oil extraction in the Ecuadorean Amazon.

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The license for oil exploration specifies that less than 1 percent of the total area of the Yasuni National Park will be affected.

The government of President Rafael Correa has been subject to criticisms from some environmental groups for its decision to open a portion of the Yasuni National Park for oil exploration. However, many of the criticisms come from organizations and politicians openly opposed to the Correa government.

As an oil-exporting country, the income derived from oil extraction is a critical component of the national budget.

President Correa celebrated the news of additional oil reserves on his official Twitter account, reaffirming his opinion that the decision to open up Yasuni to oil extraction was the correct one.

Under the Correa government, the income generated from oil extraction has been reinvested in the country through the construction of schools, hospitals, and roads. Ecuadorean law demands that 12 percent of the revenues stay within the affected zone, in an effort to benefit the surrounding communities.

The sharp drop in the price of oil has impacted government revenue, however, yet the price of oil is expected to stabilize at US$50 this year. The ITT region of the Yasuni National Park encompassing Ishpingo, Tambococha and Tiputini is expected to produce 20,000 barrels a day by year's end.

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