Q+A-Risks to Ecuador oil, mining sectors amid unrest

QUITO, Sept 30 (Reuters) - Police protesters attacked Ecuadorean President Rafael Correa over austerity measures on Thursday, leaving the leftist leader holed up in a hospital and plunging the OPEC nation into political chaos.

The unrest was sparked by dissident police protesting over a government proposal to cut their bonuses.

The U.S.-trained economist&${esc.hash}39;s aggressive drive to tighten the state&${esc.hash}39;s grip on oil and mining revenue has hurt investment in the South American nation since he took office in 2007.

Ecuador is one of the continent&${esc.hash}39;s largest oil producers, but among the smallest in the oil producers&${esc.hash}39; cartel, with daily production of around 470,000 barrels of crude.

Foreign mining companies have found world-class copper, silver and gold deposits in the Andean nation, but delays with environmental permits and a government-ordered freeze on operations two years ago has hit projects and stock prices.

Below are some questions and answers about the country&${esc.hash}39;s oil and mining sectors amid the political upheaval.

IS ECUADOR OIL INDUSTRY AT RISK?

Oil operations in the remote Amazon region are unlikely to be immediately affected by the protests, which are centered in the capital Quito and other major cities.

The oil industry was spared from previous political upheavals that led to the toppling of three presidents during the decade before Correa took office.

Violent protests by Amazon residents demanding a bigger share of the oil wealth in 2006 was the last major blow to the sector, crippling production and halting exports. Correa succeeded in halting sporadic protests by poor communities in the country&${esc.hash}39;s oil heartland by boosting security.

One risk to the industry would be if demonstrations spread to include troops who guard state and private oilfields.

Industry sources and former oil officials see a low probability that workers in the state oil company Petroecuador would join protests, even after they clashed with Correa over massive lay-offs and cuts to their benefits.

Correa&${esc.hash}39;s political rival Lucio Gutierrez, himself toppled by massive street protests in 2005, has strong support in the Amazon region, but analysts don&${esc.hash}39;t expect him to rally supporters to hit oil operations.

ECUADOR&${esc.hash}39;S OPEC QUOTA?

The country&${esc.hash}39;s oil quota is unlikely to be affected by the demonstration if production areas remain calm.

Local critics say Ecuador is already exporting more than its quota to reap the benefits of a recovery in global oil prices. Still, the country&${esc.hash}39;s production is only a tiny part of OPEC&${esc.hash}39;s overall output.

IMPACT ON NASCENT MINING SECTOR?

The protests are not seen having an immediate impact in the growing mining sector, which still only has marginal production as most foreign companies working in Ecuador are still proving their copper, silver and gold deposits.

Protests could hurt investor sentiment in the sector, though, which is still reeling from a mining ban ordered by Correa allies that lasted for more than a year beginning in 2008. It could also delay the permits companies need to develop projects, which include some of the world&${esc.hash}39;s top untapped gold deposits, mining consultants and industry executives said.

Kinross Gold <K.TO> and IamGold <IMG.TO> are some of the main miners exploring in Ecuador. Their shares are unlikely to suffer from the upheaval as operations in the country remain small when compared with their holdings worldwide.

FUTURE INVESTMENT?

Both oil and mining investment could dwindle further due to the instability, which may stunt output in coming years.

Crude output has fallen around 9 percent since Correa took office as oil companies reduce spending while they negotiate new contracts with the government.

Correa&${esc.hash}39;s move to default on its foreign debt has also scared away investors, who are flocking to neighboring Peru and Colombia amid a commodities boom. (Reporting by Alonso Soto in Santiago; Editing by Daniel Wallis and Eric Walsh)