Oil production in Central America

Magda Lanuza


    Ulla Lehtinen: "Indigenous peoples and oil" events in Finland 1999 
    Olli Tammilehto: A civilised world or a bloodsucker of the earth? 
    Background information on oil 
    Russia's oil production 
    Florian Stammler: Where does our oil come from? 
    Yeremei Aipin: Russia's oil industry and the development of rights of indigenous people 
    Agrafena Sopochina: "We Live on what the earth carries on itself" 
    Yuri Vella: Kogalym-Lor - the lake where a man died 
    Bruce Forbes: Industrial development in the Yamal-Nenets Area 
    Lidia Okotetto: I no longer understand the tundra that has loved me 
    Grigorii Anagurichi: A clash of civilisations at the ends of the world 
    Charity Nenebari Ebeh: The Ogoni experience 
    Magda Lanuza: Oil production in Central America 
    Ecuador and oil 
    Arturo Yumbai Iligama: The war against the poor 
    Colombia, the U'wa and oil 
    Roberto Afanador Cobaria: Oil is blood of the earth 
    Workshop 1: The strategies of oil industry and the responses of indigenous peoples' movements 
    Workshop 2: Networking of indigenous peoples threatened by oil and gas exploration 
    Workshop 3: Northern Dimension
    Communique of the participants in the seminar "Indigenous Peoples and Oil" 
    Internet links
Even though Central America (Belize, El Salvador, Guatemala, Honduras, Nicaragua and Panama) has little energy resources, it has an important role as an oil transportation lane due to the Panama Canal. For instance 32 million tonnes of oil products passed through the canal in 1997.


When the armed conflicts ended in Nicaragua in the beginning of the 1990s, foreign investors came into the country with the structural adjustment programme demanded by the IMF and the World Bank. Exploration conducted a few decades ago (1940-1950) did not yet find lucrative oil deposits in the region. In spite of that the government approved in 1997 a new law allowing the prospecting and extraction of fossil fuels. In the same way it committed itself to reduce the use of coal. The Central American development bank supports the idea. This undoubtedly has been influenced by the fact that in the globalized world technological development has made it possible for oil companies to find viable oil deposits in ever more distant places.

In August 1998 the Nicaraguan government granted the first permission for oil extraction to a foreign company. In October 1998 the government marked out two areas for oil production on the Atlantic coast. The size of the areas is about 400,000 hectares (990,000 acres). One of these is located only six kilometres (3.7 miles) from the nature reserve of the Miskito Kayes, which in 1991 was identified as biologically the most diverse area in the continental plateau of the Caribbean. It is the breeding place for the green turtle, that is protected by the Nicaraguan ministry for the environment, and other species that are important for the ecosystem. Representatives of indigenous peoples managed to halt the project, but in May 1999 the government granted rights to a Norwegian company to explore for oil deposits, the results of which will be made available to foreign investors in 2000.


Guatemala is the only proper oil-producing country in Central America. The largest oil deposits of the region are also found there. Thirty-two oil deposits are exploited in the country, which produce a total of 1.75 million tonnes of oil a year. Almost all of them are located in the nature reserve in Peten. Thousands of people belonging to indigenous nationalities live there, and they have suffered human rights abuses and pollution of their living environment.

The biggest oil company in Guatemala is Basic Oil, a subsidiary of Canadian Norce company. However, the government has granted drilling rights to five companies in 1997. At the end of the 1980's sabotage attacks damaged oil production facilities.

Mexico and Guatemala have agreed on the construction of a common gas pipeline that is being laid down from Ciudad Pemex in southern Mexico to Escuintla in northern Guatemala. It would follow the oil pipelines in the natural reserve area in Peten and would serve mainly industry and for generating electricity. This pipeline is planned to be extended to Costa Rica as part of a wider Central American gas network.

Costa Rica

Costa Rica reserved already five places for oil extraction by June 1998 and again in May 1999. These places are located in Talamaca, a reservation for one of the last indigenous peoples of the country. Already earlier oil has been drilled in the area, which has caused a lot of pollution, health hazards and negative cultural influences.


In 1997 Mexico was the sixth biggest petroleum producer and the ninth biggest exporter in the world. The state-owned Pemex is the world's sixth biggest oil company.

In 1999 Pemex will concentrate its activities in the oil deposits in the Gulf of Mexico. Production has been increased during the last few years because of Mexico's foreign debt. The country was forced to take huge loans from US banks when its currency ran into crisis. Mexico produces 175 million tonnes of oil annually, 150 million tonnes being crude oil. It has extensive drilling plans especially around Campeche. Mexico is estimated to have the second largest oil reserves in the Americas after Venezuela. However, Mexico was forced to scale down oil production in 1998 due to the exceptionally low world market prices in order to raise the value of oil.

In the Tabasco and Veracruz regions oil production has polluted large areas of land belonging to indigenous peoples, fishermen and farmers. These have also risen to resist the misuse of their land and the environmental damages caused by oil companies.

Speech in the seminar

The situation in Nicaragua is similar to several other countries in Central America. The government has granted permission to transnational oil companies to prospect for and drill oil, with indifference to the opinion of indigenous peoples. These companies are using the newest technology in oil exploration so that they can exploit even small and low quality deposits. Only a few years ago this was still not possible. The World Bank has demanded the implementation of structural adjustment programme that guarantees the interests of big companies. Central American countries are also under an enormous debt burden, which they can never pay back.

Mexico has produced oil for a long time, but a new era is emerging there, too. There are 14 oil production sites in Guatemala at the moment. Natural resources there are running out, and oil has to be explored all the time in new locations. The Honduras government is at the moment satisfied with its new discoveries. The Nicaraguan government is planning new oil production agreements in which, among other things ,it would shift the borders of the nature reserve of the Miskitos Kays and would violate human rights. In Panama and Costa Rica similar agreements that would violate human rights and disturb the ecological balance are being planned.

Many organisations such as environmental groups and Oilwatch have already begun a campaign against drilling oil. It is a long road but we do not want to repeat those mistakes that have led to the extinction of some indigenous peoples. Fishing is the source of livelihood for indigenous peoples living on the Atlantic coast in Nicaragua and for several peoples on the pacific coast. Oil exploration and production cause pollution that is destructive to fishing communities. Oilwatch has filed a lawsuit against our government, and we are also trying to file another one in the United Sates, similar to what Ecuador has done against Texaco.

We do not allow any more oil exploitation in our regions because the damages from such activities are too large for the environment and the local communities. If we are living in a civilised world we have to consider all energy forms. The big energy consumers, the so-called First World and rich countries should not increase their oil consumption. We are not going to give up, for oil exploration does not benefit us: neither at the state nor community level. Governments and oil companies claim that oil production creates employment and improves the economic condition of our countries, but the experience has shown that these are lies. The jobs are not long lasting. That is why we say "no"!

These processes of granting permits are the same in Guatemala and Ecuador. There is a nature reserve in Guatemala that is a tourist attraction. But the government is about to grant permission for oil exploitation in the area. An attempt by Oilwatch to negotiate with the government and the oil companies on the issue has proved futile. At the moment it appears impossible to reach a common understanding. The government of Guatemala has, however, conceded that international pressure could create an influence. We have made a resolution in this seminar so that those present can send it to the government of Guatemala. Transnational companies have abused the rights of indigenous peoples and threaten their living conditions and their existence. We urge you to appeal to governments in order that they respect and defend the rights of indigenous peoples and their traditional way of life. If the present trend in oil consumption continues, it is quite likely that in future there will be wars over natural resources. We believe, just like all indigenous people do, that land is sacred and oil is the blood of the earth. Transnational corporations and governments do not understand our values and our belief that land is sacred. They want to become richer by dispossessing us of our natural resources: oil, metals, forests. We have to be concerned and start acting so that these peoples can continue with their lives in peace. We have to guarantee them the rights to the use of their own natural resources. Transnational companies and governments have to respect our spirituality and our beliefs, which are far removed from the modern world of money. We believe in life and want that our planet would be habitable for future generations.

Magda Lanuza is from Nicaragua. She is the Central American representative of Oilwatch that has been active in Central America since 1998. Oilwatch is an international network made up of environmental, women's, agricultural workers' and human rights organisations. Founded in 1996, Oilwatch works mainly among indigenous peoples who have suffered the most from the harmful effects of oil production and related human rights violation. The organisation operates in three continents: America, Asia and Africa. Members of Oilwatch include also other NGOs as well as local groups who are working and struggling against exploitation and prospecting for oil.