Background on Texaco Petroleum Company's Former Operations in Ecuador
The history of petroleum development in Ecuador dates back to 1878 when Ecuador's National Assembly decreed exclusive rights to M. G. Mier and Company for the extraction of petroleum, tar, kerosene and other bituminous substances in the Santa Elena Peninsula.
In 1937, the government of Ecuador granted Shell Oil the first oil concession in the Oriente region of the Amazon. In 1964 the government invited a Texaco subsidiary, Texaco Petroleum Company, and Gulf Oil to explore for and produce oil in that region through a partnership with the government.
Exploration in the Oriente
Central to the government's actions at that time was its desire to strengthen Ecuador's economy by developing the petroleum, fishing and agricultural sectors, and to resolve a long-standing border dispute with Peru involving the Oriente region. Development of the petroleum resources was just one of the government's ways of securing its claim in the Oriente. The government also granted land and passed laws that encouraged colonization in the region. The colonization, in turn, led to commercial development, including logging, mining and agriculture. Here, as in any developing nation, forested lands gave way to forms of land use needed to support the growing population.
In Ecuador, as in many countries, minerals are owned by the government and developed through government entities. Petroecuador, Ecuador's state oil company, and Texaco Petroleum jointly explored for and produced oil in the Oriente through a business partnership called a consortium. Texaco Petroleum's involvement with the project was governed by a 28-year concession agreement. Gulf Oil participated in the partnership early on, but by 1977 Petroecuador became the majority owner with 62.5 percent interest. Texaco Petroleum held a minority interest at 37.5 percent. All activities of this oil producing consortium were conducted with the oversight and approval by the government of Ecuador. In 1990, as the end of the concession agreement approached, Texaco Petroleum transferred operatorship of the consortium to the Ecuadorian government, but maintained its 37.5 percent ownership interest in the oil production until 1992 when Texaco Petroleum's concession ended, and Petroecuador became the 100 percent owner. Neither Texaco nor any of its subsidiaries have been involved in the oil exploration and producing operations in Ecuador for 15 years.
During its years of operations, Texaco Petroleum consistently complied with the laws of Ecuador and international petroleum industry environmental standards. In fact, Texaco Petroleum developed a new industry standard for operating in sensitive environments, including the use of helicopters to move equipment in order to minimize the creation of roads. Other oil companies operating in the Amazon region have since adopted this practice. Texaco Petroleum also conducted an extensive remediation program at the end of the concession agreement to ensure no lasting environmental damage.
In 1993, plaintiffs' lawyers filed their first lawsuit in the U.S. against Texaco Inc. On four separate occasions U.S. courts dismissed this litigation on the grounds that the U.S. court system was not the proper venue. Plaintiffs' attorneys ultimately acceded to these court rulings and in May, 2003 filed a new suit against ChevronTexaco in Ecuador. During this 10-year period, plaintiffs' attorneys have never presented any credible, substantiated evidence to support their allegations.
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Environmental Remediation and Health Impacts
At the end of the concession agreement, two audits were conducted to address the impact of the consortium operations on the soil, water and air, and assess compliance with environmental laws, regulations and generally accepted operating practices. Such audits are standard industry operating practice. The two internationally recognized consulting firms that conducted the audits were AGRA Earth & Environmental Ltd. (formerly HBT AGRA Ltd.) and Fugro-McClelland (FM). Each independently concluded that Texaco Petroleum acted responsibly and that there was no lasting or significant environmental impact from the former consortium operations.
Additionally, Texaco Petroleum conducted a remediation program reflective of its 1/3 share of the oil-producing consortium with Petroecuador in which producing wells and pits formerly utilized by Texaco Petroleum were closed, produced water systems were modified, cleared lands were replanted, and contaminated soil remediated. All remediation activities were inspected and certified by the Ecuadorian government.
The $40 million remediation program began in 1995 and was completed in late summer 1998. During the process, all remediation activities were inspected and certified by the Ecuadorian government on a site by site basis. On September 30, 1998, Ecuador's Minister of Energy and Mines, The President of Petroecuador and the General Manager of Petroproduccion signed the "Final Release of Claims and Delivery of Equipment." This 1998 agreement finalized the Government of Ecuador's approval and certification of Texaco Petroleum's environmental remediation work and stated that Texaco Petroleum fully complied with all obligations established in the remediation agreement signed in 1995. In addition, the Municipalities in the area of the drilling operations signed a negotiated settlement with Texaco Petroleum that released the Company from any future claims and obligations.
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During the 26 years Texaco Petroleum operated in Ecuador, the health of the nation's people improved, according to the Instituto Nacional de Estadisticas y Censos (or National Institute for Statistics and Census) in Ecuador. Life expectancy for men and women increased from 51 and 53 years respectively in 1962, to 63 and 67 years in 1990. Infant mortality dropped from 87 deaths per 1,000 births in 1967 to 44 in 1989. These improvements occurred not just nationally, but also in the Napo and Pastaza provinces, where the former Petroecuador/Texaco Petroleum consortium operated.
Plaintiffs' attorneys and activist groups inaccurately attribute virtually every health problem in the Oriente region to oil production activities. In fact, of the credible scientific evidence presented in the Ecuador court proceedings to date:
- Greater than 99 percent of all drinking water samples tested are free of harmful levels of petroleum related chemicals, exceeding World Health Organization and USEPA standards.
- Greater than 99 percent of all soil samples collected from Texaco Petroleum Company-remediated areas confirm that the remediation met the standards set by the Government of Ecuador and that the remediated areas pose no significant risk to human health.
The science is clear - The overwhelming body of credible scientific evidence presented to the Ecuadorian Court from two years of judicial inspections demonstrates that the people of the Oriente region face no significant oil-related health risk from the areas remediated by TexPet.
Indeed, some of the world's leading epidemiologists and medical and scientific experts have reviewed the studies used by the plaintiffs to support their claims and each expert independently concluded that they are flawed, biased and inconclusive.
Researchers working in concert with plaintiffs' attorneys and environmental activists have put forward studies with statistics and claims that the historical impacts of Texpet's former operations have caused a high incidence of various diseases. However, none of these studies rises to the level of cause-and-effect research. In fact, the studies' own authors acknowledge that they do not establish a causal link, and that there are many other non-oil related factors known to have caused health problems in the region.
Dr. Laura Green is one of the leading toxicologists in the United States - a Diplomate of the American Board of Toxicology and lecturer at the Massachusetts Institute of Technology. In a sworn deposition in Ecuador, she said: "With regard to alleged adverse health effects of the oil operations per se, many of the studies provide little to no evidence of health impacts, and are further compromised by uncertainties, flaws, data gaps and instances of over-interpretation of very limited data."1
It is well documented that the people of the Oriente experience numerous health problems, because of naturally occurring bacteria, poor sanitation, and limited access to medical care. The scientific data analyzed discovered that high levels of bacterial contamination from human or animal waste (not from oil) were present in 90% of drinking water samples from the judicial inspections, indicating widespread microbial contamination of the water sources. But there is no credible scientific evidence to suggest a relationship between health problems and Texaco Petroleum Company's (TexPet) operations in the Oriente, which ended in 1990.
What plaintiffs' attorneys have chosen to ignore is what many international development agencies and NGO's recognize: The primary causes of disease in the Oriente are poverty, poor sanitation, naturally occurring bacteria and parasites, a lack of access to clean water, and insufficient infrastructure. These factors contribute to health problems in the region in several ways, including:
- Inadequate sanitation and sewage systems that result in frequent exposure to infectious parasites and bacteria-related disease
- Water contaminated from biological sources and harmful pesticides
- Chronic malnutrition and serious vitamin deficiencies
- Inadequate housing that increases likelihood of contact with infectious insects
- Lack of access to medical facilities
- Lack of trained health care workers
- It is both irresponsible and inaccurate for the plaintiffs to ignore these well-documented conditions and instead point exclusively to oil production as the cause of any health concerns.
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Evidence generated in the trial to date shows the environmental damage that currently exists is the sole responsibility of the government's oil company, Petroecuador. Petroecuador has exclusively controlled the oil fields in the Oriente since 1990. In that time, Petroecuador has never fulfilled its clean-up obligations and has run the oil fields with reckless disregard for the local environment. According to Petroecuador's own data, the company is responsible for 867 oil spills that have dumped more than 1.8 million gallons of crude oil in the Oriente.
While the scientific evidence is clear, lawyers and their activists suing TexPet, don't want you to know this. Instead, they want TexPet to pay for Petroecuador's deplorable environmental record. They ignore the fact that the Government of Ecuador certified TexPet's clean-up of the areas they were responsible for and released the company from future claims and obligations. And they ignore the mountain of scientific evidence presented to the courts that demonstrates that the people of the Oriente region face no significant oil-related health risk from the areas remediated by TexPet.
But trial lawyers don't want to talk about Petroecuador. And there's a lot more they don't want to talk about as well, like the fact they are failing to prove their case in the Lago Agrio Court. The plaintiffs' attorneys don't want you to know that:
- More than 75 percent of the soil and water samples collected by the plaintiffs come from areas outside of Texaco Petroleum Company's responsibility, often from areas around Petroecuador pits and spills.
- Every soil and water sample submitted by the plaintiffs' experts during the first three and half years of the case has been analyzed by an unaccredited laboratory, meaning that the results are scientifically unreliable and pose little legal value.
- For more than 15 months, the Civil Court of Pichincha has been trying to inspect the plaintiffs' main laboratory in order to determine if it is qualified to perform the necessary soil and water analyses. On seven separate occasions lawyers for the plaintiffs and the laboratory have obstructed justice and blocked the Judge's inspection. What are they hiding?
- According to the Government of Ecuador's official data, cancer death rates are higher around Quito than they are in the area around Lago Agrio.
- Some of the world's leading epidemiologists and scientific experts have reviewed studies used by the plaintiffs to support their claims and each expert independently determined that they are flawed, biased and inconclusive.
- Bacterial contamination from human or animal waste has been found in 90 percent of drinking water samples taken by Chevron experts in the Oriente and is likely the origin of many of the area's health problems.
- The Government of Ecuador declared that Texaco Petroleum Company's clean up was effective and released Texaco Petroleum Company from any future environmental liabilities.
Chevron is fully aware of the challenges faced by the residents of this region and is sympathetic to their plight. The vast majority of the population lives in poverty and has no access to basic services. However, we firmly reject the notion that Chevron should be held accountable for addressing the overall problems of the region, caused because of the perception or the fact that the government and the state oil company are unwilling or unable to shoulder their responsibility.
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Texaco Petroleum made a significant contribution to the Ecuadorian economy with approximately 95 percent of the profits going to the government of Ecuador in the form of royalties, income taxes and market subsidies. Of the approximately $25 billion generated by the consortium, $24.5 billion went to the government of Ecuador and about $490 million went to Texpet, the minority stakeholder (data has been validated by the records of the Central Bank of Ecuador).
Over the years, Texaco Petroleum's operations provided jobs for 840 employees and approximately 2,000 contract workers, thereby benefiting almost 3,000 Ecuadorian families directly, in addition to the thousands of Ecuadorian nationals who supplied the consortium's needs for goods and services. Fully ninety-five percent of Texaco Petroleum's employees were Ecuadorian nationals, including many in top management.
Texaco Petroleum also funded social and health programs throughout the region of operations, such as the construction of roads, airports, schools, medical facilities, and potable water systems as well as substantial contributions to the Quito, Guayaquil and Loja Polytechnics and other institutions of higher education made substantial contributions to the Quito, Guayaquil and Loja Polytechnics and other institutions of higher education.
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