To drill or not to drill? That seems to be the question that Ecuador's President Rafael Correa is asking himself. Or better yet, that is the question that Correa is asking the international community about the possibility of opening up the Yasuni National Park for oil exploration.I ran across this interesting situation on The Motley Fool. Should the Yasuni National Park be kept free from drilling? There is definitely an interesting scenario taking place down south in Ecuador as the country tries to determine the future of the park.
The park is home to one of the world's greatest biological treasures as well as an estimated oil reserves of up to 1 billion barrels. The country is fairly dependent on oil exports and the reserves that are located in the park represent around 25% of the country's total discovered reserves. So the question becomes, which is more important to Ecuador? Keeping the park and its biological treasures intact, or tapping into the lucrative reserves that the area has to offer?
It seems like Correa needs a little help in making this important ethical question, so he is going to allow the international community to help him reach the difficult decision. His offer is to keep the park free from oil exploration, but with one "little" condition. In exchange for keeping oil rigs out of the park, Correa wants a "small" annual payment of $350 million a year for 10 years.
What do you think? Should other countries pony up and pay Ecuador to keep the park off limits to the oil companies? What sort of trend is this going to create for other debtor countries with undeveloped oil reserves in protected wilderness areas? And the final question would be what is going to happen ten years from now? How much will a barrel of oil cost then? What will the price tag be the next time Ecuador poses this question to the international community?
A lot of questions to think about. So ... to drill or not to drill?
Michael Fowlkes has worked as a stock trader for seven years and spent the last two years working as an analyst for the online investment advisory service Investor'sObserver.
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Reader Comments (Page 1 of 1)
6-08-2007 @ 2:29PM
Fred said...
Because of horizontal drilling techniques the "footprint" would be very small. Therefore, I feel that drilling should be allowed. Another consideration would be to use a portion of profits to purchace more land adjucent to the park and add it to the reserve.