Ecuador troops clash with oil worker hostage-takers

QUITO, Ecuador, Feb 22 (Reuters) - Ecuadorean troops fired tear gas on Wednesday at protesters accused of holding 24 petroleum workers hostage to demand a share of the country's oil wealth in demonstrations that shut one of country's main oil pipelines.

Soldiers briefly shot tear gas canisters into a crowd who on Tuesday stormed the Sardina oil pumping station, 55 miles (90 Km) east of Quito, according to an Ecuadorean military official and protesters.

Government negotiators were trying to revive talks with Napo province protesters in the latest challenge to hit embattled President Alfredo Palacio and strike at the 530,000 barrel-per-day output of Latin America's No. 5 oil producer.

A representative for the pipeline operators said the 24 workers were being threatened by at least 500 protesters barricaded inside the station.

"We are concerned for their well being," said the company official. "We hope they will be released soon."

But protest leader Wilson Pozo said the men were not being held against their will.

The political turmoil in the South American country added to concerns of a global energy market already jittery over a disruption in Nigerian oil exports.

As violence escalated on Tuesday, the government declared state of emergency in Napo province, a move that forbids public protests and marches in the area.

"I hope we can find a solution that responds to the interests of all the parties involved," Interior Minister Alfredo Castillo told Reuters. "I hope we can end the protests today."

Activists from the impoverished Napo province demand the government release more funds to their local communities to build roads, bridges and an airport.

PRESSURE ON PALACIO

The 300-mile (485 km) pipeline, which is owned by the major foreign oil companies operating in Ecuador, has a capacity to transport 450,000 barrels per day (bpd), but at the time of the stoppage it was carrying 160,000 bpd.

The pipeline is jointly owned by EnCana Corp. Occidental Petroleum Corp. , Repsol YPF and Petrobras .

"Many Amazonian provinces see these protests as an effective way to pressure a weak government," said Simon Pachano, a professor at Ecuador's branch of the Latin American Faculty of Social Sciences. "But there is not imminent threat to his government. Palacio will probably cave in to most of the demands."

Palacio took over the job after President Lucio Gutierrez was kicked out of office in April for meddling with the Supreme Court. As Gutierrez's vice president, Palacio took over the post without an election.

The 67-year-old cardiologist lacks political experience and is embroiled in a fierce political quarrel with Congress after he headed an effort to rewrite the constitution.

In his 10-month rule Palacio has often bowed to pressure from the influential provincial governments.

On Monday, Napo protesters damaged another pumping station owned by Petroecuador, the state oil company, forcing it to shut down its main oil pipeline and suspend exports for several hours.

In August, enraged inhabitants of the Amazon region obtained promises for more local investment by private oil companies and the government after shutting down production for several days.

"Residents of these provinces use protests as black mail to collect rent from the government," said Guillaume Fontaine, an expert on oil conflict in Ecuador and professor at FLACSO.

The Amazon' region sits at Ecuador's largest oil reserves, and is home for some of the poorest provinces in the Andean country. Protest leaders have said that other Amazon provinces have shown interest in joining the protests.