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DE RUEHQT #1887 2132110
ZNR UUUUU ZZH
O 012110Z AUG 06
FM AMEMBASSY QUITO
TO RUEHC/SECSTATE WASHDC IMMEDIATE 4963
INFO RUEHBO/AMEMBASSY BOGOTA PRIORITY 5833
RUEHCV/AMEMBASSY CARACAS PRIORITY 1899
RUEHLP/AMEMBASSY LA PAZ AUG 9978
RUEHPE/AMEMBASSY LIMA PRIORITY 0812
RUEHGL/AMCONSUL GUAYAQUIL PRIORITY 0912
RHMFISS/CDR USSOUTHCOM MIAMI FL

UNCLAS QUITO 001887 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: PGOV PREL EC
SUBJECT: MINISTER OF LABOR CHIRIBOGA NAMED HEAD OF 
PETROECUADOR 
 
 
Palacio Reshuffles Petroecuador 
-------------------------------------- 
 
¶1.  (U) President Palacio replaced the board of directors of 
Petroecuador, and named Labor Minister Galo Chiriboga 
president of the state energy company on July 31.  The 
decision comes after the failed July 27 auction of 17 million 
barrels of crude oil from Occidental's former concession, 
Block 15, which Palacio terminated at the eleventh hour. 
According to Minister of Economy Armando Rodas, Palacio was 
upset that the auction was ill-run and that many state-owned 
companies were unable to place bids on time. 
 
¶2.  (U) As the fifth president of Petroecuador during 
Palacio's time in office, Galo Chiriboga stated that his 
first priority would be overseeing the postponed auction of 
crude scheduled for August 4, in order to encourage greater 
participation from state-owned enterprises (only one 
state-owned company was prepared to bid).  Chiriboga also 
said that he would work to strengthen the country's petroleum 
production capacity, work with the Ministry of Economy to 
create a trust fund that will facilitate the consolidation 
and professional technical management of Block 15, and try to 
improve communication and coordination with the Ministry of 
Energy. 
 
¶3.  (U) Subsecretary of Labor and Employment Dr. Jose Serrano 
will serve as interim Minister of Labor. 
 
Comment 
------- 
 
¶4. (SBU) Chiriboga's appointment signals that Palacio 
recognizes the need for better coordination between 
Petroecuador, the Ministry of Energy and the Presidency. 
Although he lacks experience in the industry, he is favorably 
known to us on labor issues.  Chiriboga has served as 
Palacio's trusted fixer and fill-in before, stepping in as 
minister of government for several weeks, and is unlikely to 
diverge from his boss's wishes.  The official story from the 
Presidency is that the invitation process was poorly run and 
that some state-owned companies (eg PEMEX) were invited to 
bid two days after closing. A downside of Chiriboga's 
departure from Labor is that it probably makes the needed 
labor code reform he had been championing even less likely 
before year's end. End Comment. 
BROWN