Ecuador approves oil drilling in Amazon reserve

Ecuadorian President Lucio Gutierrez gave Brazil's state-run oil firm a green light to start drilling inside an Amazon jungle reserve, prompting an immediate court challenge by environmentalists. Gutierrez made the announcement during a visit by Brazilian President Luis Inacio Lula de Silva.
The Ecuadorian government approved plans by Petroleo Brasileiro, or Petrobras, to drill in a jungle area designated a protected biosphere reserve by UNESCO in 1989. The area, called Block 31, is believed to hold 230 mm barrels of oil.

Ecuadorian environmentalist and indigenous groups warn that the deal means three foreign oil companies now will be able to drill virtually throughout the reserve. The other concessions have been awarded to Spanish-based Repsol-YPF and US-based Occidental Petroleum.
Energy Minister Eduardo Lopez downplayed the protests, saying Petrobras plans to invest $ 100 mm in the country over the next five years. Deputy Environment Minister Ruben Moreno said regulators will ensure that Petrobras uses the latest technology to avoid environmental damage or harm to jungle Indian communities.

The two presidents also signed several accords related to telecommunications, commerce, social programs and petroleum development.
"Brazil will stimulate the business integration between the two countries," Lula de Silva said after a signing ceremony. "It will push for a real economic integration, and for a South American community of nations."
Since taking office in January 2003, Lula de Silva has sought to strengthen ties between South America's largest country and its 10 neighbouring nations in a bid to gain clout in a region traditionally influenced by US policy.