The ministry suspended work in January due to tree damage.

"The temporary suspension has been lifted after the company recognized it had done work without the Ministry's authorization and under the commitment to repair damage to the area," Murillo told Reuters.

Environmentalists oppose the route for OCP's $1.3 billion heavy-crude pipeline under construction through Mindo-Nambillo forest, an important bird habitat and ecotourism hub located outside of Quito in the Andes mountains.

But economists see the pipeline, with capacity to transport 450,000 barrels of crude per day, as the lifeline of this cash-strapped nation's economy and a source of potential export revenues to keep the government budget on track.

Murillo said the government planned to seek monetary compensation from OCP for the destruction of local habitats while working in the ecologically sensitive area.

A Ministry tribunal will determine whether the company has violated local forestry laws, he said.

Currently Ecuador just has the state-run Transecuadorean Pipeline, with a capacity to carry 400,000 barrels per day from Amazon oilfields to the coast. The new pipeline is expected to start pumping later this year.

OCP is made up of EnCana Corp. (ECA.TO), Agip Petroleum (ENI.MI), Occidental Petroleum Corp. (OXY.N), Perenco, Repsol-YPF (REP.MC), Perez Companc (PCH.BA) and Argentine construction firm Techint.

OCP declined comment until the company is officially notified that the suspension has been lifted.