Ecuador state oil company Petroecuador says it will shut down a large drilling project in the Yasuni ecological reserve in the Amazon rainforest, following a referendum vote to protect the environment and wildlife.
Petroecuador CEO Reinaldo Armijos told reporters the company has a plan for the gradual closure of the 43-ITT block, which currently pumps around 57,000 barrels per day (bpd).
In a result hailed by both environmental and indigenous activists, voters in August opted to shutter production at the 43-ITT block in an effort to better protect the Yasuni reserve, a national park located in the Amazon in northeastern Ecuador.
Flora and fauna affected by oil production in the reserve will take many years to recover, Environment Minister Jose Davalos said in September.
Armijos said the initial cost to shut down the project is estimated at $600 million. He also noted that lost revenue from the project due to the looming suspension will likely total about $680 million next year.
The state-run producer's crude output currently stands at about 400,000 bpd.
Ecuador is one of Latin America's mid-range oil producers, behind regional heavyweights Brazil, Mexico and Colombia.
Armijos said output will likely end next August at around 41,000 bpd before the project, which entered into production in 2016, is closed down. He emphasised that incoming President Daniel Noboa, who will take office in late November, will have the last word on the block's status.
Noboa has previously said he will respect the will of voters to end the project.
Drilling contracts at 43-ITT will remain in place through the end of this year, and then from January Petroecuador will not seek to maintain its output, added Armijos.
The project's closure is also seen as impacting the OCP oil pipeline, which will come under government control come next year.
Environmental groups and local indigenous communities have described the vote to close the oil project as a historic step toward reducing the harmful effects of climate change.
Alexandra Valencia - AAP