(Chuck from Ashville running the Lower Jondachi. When Chuck wasn’t being a “Candy-Ass” (I think this term was coined on the trip) he was out ripping it up on Ecuador’s rivers and creeks).
After reading last week’s blog, I’m sure you are all wondering, “Darcy, you say Shell pulled out of Ecuador in 1947 saying they only found unviable results, what was up with that?” Well, don’t worry, here’s a little lowdown on the global oil situation between the 1920’s and 2000.
The Oriente’s (Ecuador’s eastern half–where we go kayaking) physical transformation was not solely the result of the Ecuadorian government’s policies, Texaco-Gulf’s technology, or Ecuador’s landless population; circumstances in the global oil situation we just right in the late 1960s to push multi-national oil corporations to stretch the limits of their operations and move into a remote region of Ecuador.
Then, the 1939 discovery of oil in Saudi Arabia sealed the fate of Ecuador’s Oriente for the next thirty years. With Saudi Arabia oil, “the single greatest prize in all of history,” there was absolutely no need for Ecuadorian oil, and Shell (by then Standard was already out) declared their long years of exploration fruitless, claiming there was no oil in the southern Oriente. Today, Maxus (after having bought Conoco’s concession) is producing oil from this region (the region that Shell earlier declared devoid of oil), and their wells have proven so lucrative as to make it worthwhile for them to fight the government to open more land (land that is protected by national parks and reserves) for oil production.
In 1956, Egypt’s leader, Gamal Abdel Nasser, nationalized the Suez Canal Company, provoking action from the United Kingdom, France, and Israel who used the canal, among other reasons, to transport their oil from the Middle East to its markets. Europe was transporting two thirds of their oil through the Suez Canal, which gave them motivation to keep control over access and tariffs. Their campaign against Egypt to win back control over the canal was unsuccessful, marking an unprecedented victory for Egypt. Nasser’s triumph with the Suez Canal “was a warning to the oil-consuming West,” and gave rise to nationalism and anti-colonialism throughout the world.
Then, in 1960, Venezuela, Iraq, Iran, Saudi Arabia, and Kuwait formed the Organization of Petroleum Exporting Countries (OPEC) at the instigation of Juan Pablo Perez Alfonso of Venezuela. A combination of OPEC’s objective of restricting oil production, and the sky rocketing use of petroleum products were bringing the world oil glut to an end, and visions of shortages were on the horizon. In the same year that OPEC formed, Dr. Armand Hammer’s Occidental Petroleum (OXY) discovered oil in Libya and was negotiating terms of extraction with Colonel Muammar al-Qaddafi. Although Dr. Armand Hammer did eventually strike a deal and begin oil operations in Libya, the contract was not on his terms. This negotiation marked the first time in foreign oil dealings that the producing country had dictated the terms with an oil company, and as Yergin points out, “the heyday of the majors was over.”