Friday March 31, 7:59 pm Eastern Time

UPDATE 1-Colombia oil site ruled 'off-limits' to Oxy

(Adds background, Calderon quotes)

BOGOTA, March 31 (Reuters) - A Colombian court has ordered Occidental
Petroleum Corp (NYSE:OXY - news) to halt all work on a promising oil site
that the country's native U'wa tribe claims as part of their ancestral
lands, authorities said Friday.

Alberto Calderon, president of state oil company Ecopetrol, said the court
injunction was handed down Thursday and would effectively block, if upheld
on appeal, what he described as ``the most important oil prospect this
country has.''

``The project has been paralyzed,'' Calderon told a news conference.

He was referring to the so-called Samore block in a guerrilla-dominated
area of northeast Colombia, which is believed to harbor up to 2.5 billion
barrels of crude oil.

The site could help ensure much-needed petro-dollars and energy
self-sufficency for Colombia, which could become a net importer of crude by
2005 if no major new finds are made to lift proven reserves from current
levels of about 2.4 billion barrels.

But Calderon said a Bogota judge supported the U'wa tribe's claim that
Samore -- while located just outside their official reservation -- is part
and parcel of the ancestral lands of their forefathers.

He said the judge ruled that drilling on the site would violate
``fundamental rights'' of the U'wa people, including their right to life.

The U'wa grabbed the media spotlight for the first time about five years
ago, when they first vowed to commit mass suicide if their land was
``violated'' by Occidental or any other oil company.

``What's at stake here is 40 million inhabitants,'' Calderon said, adding
that the government would appeal the ruling next week on grounds that it
favored the U'wa, who number no more than about 7,000, over the general
population of Colombia.

Occidental has seen its exploration of the Samore block delayed since 1992
because of the land dispute with the U'wa.

The U.S. multinational finally won government permission to develop Samore
late last year. But U'wa protesters have surrounded the first test drill
site, on the edge of Samore and dubbed Gilbraltar-1, since November to
prevent the drilling for oil
which they believe to be the ``life blood of Mother Earth.''

The protesters reported that three U'wa children drowned last month, after
security forces moved to disperse them and forced the infants' mothers to
jump into a fast-moving, rain-swollen river.

Police and the military officials disputed that account, however, calling
it ``propaganda'' aimed at calling attention to the Indian
group's politically-charged standoff with Occidental.