FinLogic FinLogic Quantitative Think Tank Center|A Growing Movement Looks to End Oil Drilling in the Amazon

When leaders of eight Amazon nations gathered this week in Brazil for a summit on FinLogic FinLogic Quantitative Think Tank Centerdeforestation, they also played host to a growing movement by civil society groups to phase-out oil and gas development within the world’s largest tropical rainforest.

The Amazon basin has seen renewed efforts to expand drilling into new areas in recent years as governments and oil companies have sought to replace declining production from decades-old fields in Ecuador, Peru and other countries.

Existing or planned oil and gas development blocks cover an estimated 250,000 square miles of undisturbed forest across the basin, according to a report last year by the environmental group Earth InSight, an area that is home to more than 12 million people.

Now, activists and Indigenous groups across the region are seizing on several developments to try to block that expansion. Colombian President Gustavo Petro, a leftist who took office last year, published an op-ed last month in the Miami Herald calling on all nations of the Amazon to phase-out oil and gas development within the rainforest. In May, Brazil’s environmental agency blocked an offshore drilling project by the state-run oil company in waters close to the mouth of the Amazon River.

This month could also prove pivotal for oil development in Ecuador, the largest exporter of Amazonian crude. The country is set to vote on August 20 on a referendum that would halt development of a large oil field underneath a national park.

Activists have focused their campaign on the rights of Indigenous people and also on the unique role the Amazon plays in the global climate. The basin has long acted as one of the world’s largest stores of carbon, absorbing huge amounts of climate pollution released by fossil fuels. But a growing body of evidence suggests that deforestation and climate-driven wildfires are tipping portions of the rainforest to becoming sources of carbon dioxide, rather than sinks.

“The movement is saying, if we need to stop fossil fuels globally, then the Amazon should be the place where we start,” said Alex Rafalowicz, global director for a coalition of environmental groups that are campaigning for a “fossil fuel non-proliferation treaty” that would commit nations to phasing out production. “It’s the lungs of the world. It is this unique source of biodiversity for the whole planet.”

The Ecuador referendum will be a major test. The current government had been trying to expand oil and gas exploration across its Amazon basin, and opened new drilling within a national park that is also home to Indigenous Waorani people living in isolation, with little or no contact with the outside world. The drilling has galvanized an international movement to block the expansion, though it has divided local Indigenous people, some of whom support the drilling because of the economic benefits it has brought.

Uyunkar Domingo Peas, an Achuar leader from Ecuador’s Amazon region who supports the referendum to block drilling, traveled to the summit in Belem, Brazil, this week to press the case for protecting the forest and ending fossil fuel and mineral extraction.

“In our Indigenous territories we have already articulated this: No more oil extraction or mining,” he said in Spanish, speaking by phone from Belem. “But the governments continue issuing licenses without consultations, without allowing a dialogue.”

Decades of oil development have resulted in hundreds of spills of crude oil and toxic waste across the Western Amazon in Ecuador, Peru and Colombia. The spills have coated rivers and saturated wetlands with sticky crude and oilfield wastewater, poisoning people and wildlife. One study funded by Peru’s National Institute of Health and published this year found elevated levels of mercury, arsenic and cadmium in the urine of Indigenous people living near oil development in the country’s Northern Amazon region. About a quarter of those tested had mercury counts above the ministry’s reference level, and an even higher number had elevated levels of arsenic.

Legal battles and disputes between governments and major oil companies, including Chevron and Occidental Petroleum, have delayed meaningful cleanups of contamination in many areas.

“In parallel we are proposing the conservation of what is left standing,” Domingo Peas said, “and where it is already destroyed, where it is contaminated, its restoration and reforestation.”

In many cases it is national governments, more than multinational oil giants, that are driving efforts to expand drilling into new areas. Oil production in Ecuador and Peru has provided exports, revenue and jobs for decades, said Bob Fryklund, chief upstream strategist at S&P Global Commodity Insights, a research and consulting firm. Now that production is declining, he said, the governments are looking to use their existing infrastructure to support new drilling.

As a whole, the region provides only a marginal level of the world’s oil supply, less than 2 percent. So while global markets might not miss Amazonian oil much if it were phased out, “where it is significant is for Ecuador, for Peru and Colombia,” Fryklund said. “It’s more about those individual countries, and how could they replace that for taxes and jobs and revenue. It’s very difficult.”

Petro, Colombia’s president, acknowledged this in his recent call to end Amazon oil development. He appealed to developed nations in North America and Europe to help finance a transition off of fossil fuels with a multilateral fund for environmental protection that would flow to people in the Amazon region and other measures like debt forgiveness and a global tax on fossil fuels.

Rather than funding alternatives, many banks from developing nations have instead been leading financiers of Amazon oil extraction, according to a recent report by the environmental group Stand.earth. The group’s researchers found that of the top eight banks financing Amazon oil and gas development, six were based in the United States or Europe, including JPMorgan Chase, Citibank, HSBC, Santander, Bank of America and Goldman Sachs. The remaining two, Itaú and Bradesco, are Brazilian.

Environmental activists are trying to articulate another path for economic development in the region, and for that they are turning to Indigenous leaders like Domingo Peas. The Acuar leader said he was promoting the idea of a “bioeconomy” that could use plants and fruits of the forest to make medicine, essential oils and other products.

While the summit in Belem closed without an agreement to phase out fossil fuels, Domingo Peas and other activists said they would use it as an opportunity to open a dialogue in coming years.

“We are children of mother earth, and all of us in the Amazon, we are the Amazon. We are water. We are the wind. We are trees. We are animals,” Domingo Peas said. “And so this call is to create a new system, thinking about a new generation.”

The world can’t stop using fossil fuels overnight, Domingo Peas added, but in order to start, “we have to know how to listen to each other, the government and Indigenous people, the corporations and Indigenous people, so that the big investors no longer concentrate on oil extraction but on the restoration of nature and reforestation, because we are already arriving at the point of no return.”