As demand and the price of oil have soared worldwide, producers have sought to match the supply at all costs. This means exploring increasingly inaccessible sites - including in the Amazon - where oil may be available.

But while environmental and social considerations are making timid first steps in this sector, the oil industry remains as dangerous as ever for biodiversity and people living in the vicinity of extraction sites.

What are the impacts of oil and gas extraction?

Impacts of energy exploration and extraction may include:

• Deforestation: To set up their operations, companies open roads through forests. These bring settlers who have access to timber and new land, and who may engage in slash-and-burn activities and logging.
• Indigenous conflict: Indigenous and local peoples often gain the least from natural resources extraction, but stand to lose the most. Compensation from energy firms and the government, where it is awarded, is often very small. In addition, local communities are not always informed of extraction projects.
• Biodiversity loss: Fragmentation of natural habitat caused by the installation of pipelines, leading to smaller population sizes that are not viable in the long term. Where oil and gaz companies are operating close to (or even inside) protected areas, oil companies may not adopt the needed sound operational practices, and hence threaten biodiversity.
  
• Soil and aquatic pollution: Many things can go wrong as oil is brought to the surface of the earth and processed. Spills and toxic by-products are sometimes dumped in the vicinity of the site or are stored in open waste pits, polluting the surrounding lands and water.
• Air pollution: Some of the by-products of natural gas are burned in the open air. The flames pollute the atmosphere and can cause fires, threatening the lives of local inhabitants. Unnecessary flaring is also a waste of gas which could provide energy to local people, reducing deforestation.

Moreover, a sudden availability of funds arising from oil or gas extraction is a mixed blessing. Where local, national and regional administrations do not have the capacity or the long-term planning required to manage large budgets, they may go overboard by investing in ambitious (or dubious) infrastructure projects that do not take into consideration the sustainable development of the area.

El Oriente - from pride to wreck

One of the most dramatic impacts of oil extraction is in Ecuador’s Amazon region (el Oriente), where US oil giant Texaco seriously degraded an ecosystem and affected the lives of thousands of indigenous peoples.

Before Texaco entered the region in 1967, it was considered as featuring some of the highest biodiversity on the planet and was home to several indigenous groups, including the Huaroni people.

At that time, Ecuador faced a foreign exchange boom from oil exports and foreign borrowing. However, over time it became obvious that this windfall was a poor blessing –   the substantial oil revenues and royalties were used by the government to build roads and subsidize cattle ranching and agriculture, causing large-scale deforestation.¹

Another example of deleterious natural resources extraction is the Camisea natural gas project.

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¹ Wunder, S. 1997. From Dutch Disease to Deforestation - A Macroeconomic Link? A case study from Ecuador. Danish Institute for International Studies. CDR Working Paper 97.6

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