Ecuador Reaches Preliminary Deals On Oil, Mining With Indigenous Groups

Ecuador reached a preliminary agreement with indigenous groups to declare a temporary moratorium on 16 oil blocks, Energy and Mining Minister Xavier Vera said on Wednesday, a turning point in negotiations aimed at staving off renewed street protests.

President Guillermo Lasso, a conservative ex-banker, opened a 90-day dialogue in July to hash out implementation of a deal, ending more than two weeks of indigenous protests against his economic and environmental agenda.

The demonstrations left at least eight people dead and severely impacted the oil industry. The protests forced price cuts to gasoline and diesel, and enactment of fertilizer subsidies and other measures the government says will cost $600 million.

Indigenous groups are demanding a moratorium on oil and resource extraction and for current concessions to be declared null. Lasso has agreed to suspend approvals for new projects in ancestral indigenous territory, environmentally-protected areas and archaeological zones.

"As the state we are showing that we are conceding to the request," Energy Minister Vera told reporters.

The moratorium will affect blocks in the south, where there are no exploration and production operations, and will be in place until a law establishes free and informed prior consultation, Vera said.

The government will also not grant any further mining concessions until the law for prior consultation has been approved, Vera said, expecting that in the next 12 months.

Exports from Ecuador's two large-scale gold and copper mines are quickly making the sector one of the country's most fiscally important. Ecuador expects mineral sales of at least $2.8 billion this year.

"Our position is no to mining, that is the starting point and from there we'll see the government's proposal" said Gilberto Talahua, president of an indigenous group from Bolivar province. Bolivar is home to the Curipamba copper project, set to become Ecuador's third major mine.

The agreements regarding oil and mining will be signed on Friday, as will deals on advancing productivity and fuel subsidies, the government said.

Indigenous leaders were not immediately available to comment on the preliminary deals laid out by Vera.

The only deal signed so far is on debt forgiveness for small-scale farmers, with some indigenous leaders threatening to abandon negotiations if progress is not made more quickly.

"We might not have another option but renewed presence in the streets," negotiator Blanca Chancoso, ex-president of the Ecuarunari indigenous organization, told Reuters.

"The strike hasn't ended for us ... We hope (negotiations) won't just be a waste."

Other areas up for discussion in the talks set to last until mid-October, include price controls on more than 40 basic products.

The government says it is engaging with all protester demands as Lasso looks to reach agreements with indigenous groups.

Former Energy Minister Fernando Santos told Reuters, however, he was not so sure a successful deal could be reached.

"The government is weak and President Lasso is very proud. He won't cede even by accident to indigenous demands, and Mr. Iza also has a triumphal position where he wants all or nothing," Santos said, referring to indigenous leader Leonidas Iza.

"I see difficult days and no will to make agreements," Santos said, adding oil and mining could stagnate.

Lasso's office directed questions to the ministry of government, which said it could not grant Reuters an interview until later this week.

Fuel subsidies will cost about $3.8 billion this year, more than annual public budgets for health, education and security.

"In these conditions it's difficult to tilt the balance toward the negotiations," said political analyst Alfredo Espinosa, who blames Lasso's unpopularity and his disconnection from citizens.

"It's like a hostage negotiating with their captor, which is the indigenous movement."