Since 1941, in Oriente, the rain forest region east of the Andes cordilleras, oil is being produced. The first international oil crisis in the seventies triggered the first boom of the branch. The increasing oil prices lured numerous investors into the country, giving away big credits and hoping to profit from the booming oil business in the long run.
In this time Texaco built the SOTE-Pipeline. To this day about 400.000 Barrels of oil are transported from the Amazon region to the pacific ocean. The expected revenues from the oil business were supposed to exceed the debts of the credits by far.
But although oil is Ecuador's most important export good, the public long term foreign indebtedness of 242 million US-Dollars in 1970 rose to 13.4 billions US-Dollars in the year 2000 (Source Suedwind-Institute).
Lacking cost transparency, corruption, unstable investment decisions and the low integration of local interests are the key factors of this development. Through unstable oil prices in the nineteen-nineties the state ran into delayed payment.
Today, Ecuador is the country with the highest debt per person (1.100 US-Dollar) in Latin America.

Financial difficulties in increasing debt service.
 
Aleready at the beginning of the nineteen-eighties the Andes state got into financial difficulties. Until today, six contracts of debt rescheduling have been made with creditors to avert the imminent insolvency. Debt rescheduling does not dispense with any debts but the debtor has the possibility to meet his obligations over a longer term.
Far-reaching reforms were supposed to reflate the market and guarantee the solvency of the state.
In the year 2000, though, the creditors saw no other way but to partially dispense with their credits because of the disastrous economical crisis. This was only a short termed financial dispense of the state.

Oil - saviour in distress?
 
It is clear, that Ecuador needs exports, that brings foreign currency into the country. How else could the state finance the debt service? Since Ecuador has no noteworthy refining economy, besides agricultural products only unrefined products like oil can earn enough foreign currencies.
An increase of production and thus a further exploitation of own resources seems to be the only way, to cover the foreign debts.
The consequences for Ecuador are clear: The state exploits its natural resources, without using the profits from the exports for the development of the economy and the needs of the people.

The OCP-Project is no redeemer
 
Instead of looking for alternatives to this scenario, the credit of the Westdeutsche Landesbank for the OCP-Projekt enables the building of a second pipeline. In the middle of the construction phase the parties involved do not only have to face harsh protests from environmentalists but also economical problems.
In order to put through the OCP-Project, the participating oil firms have evaluated their oil concessions in Oriente to high.. After the delegate of congress, Henry Llanes the oil reserves measure up to 917 million Barrels. The oil firms, however, declared a volume of 1.6 billion Barrels of oil in total.
In consequence, the existing oil resources could only last to use the pipeline to capacity for six years.. The calculation on which the project grounds an operating time of twenty years was assessed.

Illegal securities endanger the debt service
 
The refinancing of the credit from the Westdeutsche Landesbank is endangered for that reason. The credit of the bank consortium is supposed to be amortised in seventeen years. Impossible, if the oil resources in Oriente are gone in a few years.
In addition there are the irregularities of the credit conditions.. The firms of the OCP-consortium declared the not yet produced oil resources as securities for the credit. This is dubious in two ways: the the artificially blown up oil resources do not exist officially and the resources are in possession of the state as long as they are not produced.
 
Conclusion:The Westdeutsche Landesbank is threatened by a total loss of 900 million US-Dollars. The private foreign debts of Ecuador have doubled in the last year to 4.1 billion US-Dollars through the project. The highly encumbered country is threatened once more after 1999 with the economic and social MCA.

What are the consequences of the pipeline construction and the oil construction on man and nature?