"We are cautiously optimistic that the dialogue will advance, allowing us to arrive at an agreement," Maximo Abad, mayor of the eastern oil town of Lago Agrio and one of the organizers of the attacks, said.

Last week, protesters crippled the country's oil industry and helped jack up global petroleum prices by dynamiting pipelines and vandalizing pumping equipment at installations of state oil firm Petroecuador in the eastern part of the country.

Petroecuador output has since climbed back to 105,198 barrels per day, a bit more than half its average normal production. Production from private companies in Ecuador was 311,827 bpd on Tuesday, compared to 329,000 bpd before the crisis.

Petroleum exports from Ecuador, South America's biggest supplier to the United States after Venezuela, remained paralyzed. Oil prices on Tuesday briefly reached above $66 per barrel on supply worries exacerbated by the Ecuador crisis.

The protesters, led by elected officials in communities surrounding Ecuador's oil fields, say they do not benefit enough from the country's oil wealth.

Abad and about 60 other protest leaders in Quito for talks want companies like Occidental Petroleum Corp, Petrobras and EnCana Corp. to help build roads, provide more jobs and clean up environmental damage.

The activists want 25 percent of income taxes paid by the companies to be funneled toward local development.

"That is our nonnegotiable position," Guillermo Munoz, prefect of the Amazon province of Sucumbios, told reporters.

The government is arguing for a smaller percentage to be steered toward the communities.

Protesters are also calling for the companies to help pave new highways in Sucumbios and neighboring Orellana provinces.

The activists accused President Alfredo Palacio, appointed in April after Congress fired President Lucio Gutierrez for meddling with the Supreme Court, of not backing them in their negotiations with the oil companies.

"The government is not defending the people in the provinces," Guadalupe Llori, the elected prefect of Orellana, told local television. "Neither this government nor previous ones have helped us negotiate with the companies."

Three Ecuadorean presidents have been toppled amid popular unrest since 1997, but Palacio is expected to ride out the current crisis.

"This government is going to survive," said Carlos Larreategui, political analyst and pollster at the University of the Americas in Quito. "But it will be weak."

Ecuadorean Energy Minister Ivan Rodriguez said on Monday that some oil wells may have been permanently damaged and unable to return to normal activity.

Venezuela offered on Tuesday to send Ecuador 500,000 barrels of crude to help the country cover its export requirements, along with 500,000 barrels of fuel, with shipments of similar or higher volumes possible in October, Ecuadorean officials said.