News Releases & Statements

October 21, 2003

Summary of ChevronTexaco Response to Ecuador Lawsuit

After a decade of fruitless efforts to try to convince U.S. courts to accept their lawsuit, attorneys representing people of the Oriente region of Ecuador have now filed a suit in a court in Lago Agrio, Ecuador, against ChevronTexaco.

ChevronTexaco has now presented a detailed formal response to the lawsuit filed against the company alleging environmental and health damages resulting from Texaco Petroleum's involvement in an oil producing consortium with PetroEcuador. ChevronTexaco has asked the court to dismiss the lawsuit for lack of merit, as well as on procedural and technical grounds.

In short:

  • Allegations made against the company have not been supported with any credible, substantiated scientific evidence.
  • In 1998, following a $40 million remediation program, Texaco Petroleum Company, Texaco Inc. and all other related companies were released by the Government of Ecuador and four municipalities located near consortium operations, from any legal liabilities for the operations. Therefore ChevronTexaco does not believe the court can hold the company responsible for any claims given the government's full release granted five years ago.
  • Since the Government released the company from any future liabilities or obligations, any claims should be made against the government and not the company.
  • All operations complied with Ecuadorian laws and regulations as well as standard industry technical practices of the time.
  • Under the terms of our Joint Operating Agreement the government is responsible for third party claims. ChevronTexaco can not be held responsible for the actions of a third party.
  • Laws referenced in the suit did not exist at the time of the operations and are not applicable. Moreover, the statute of limitations has expired.

The following is a detailed summary of ChevronTexaco's response and request that the lawsuit be dismissed:

There is no basis for the suit since no evidence has been presented that ChevronTexaco caused any damage to the plaintiffs.
  • Two independent audits agreed that the drilling operations had a minimum general impact on the environment.
  • The disposal of the produced water followed generally accepted industry methods that continue to be used today countries around the world.
    • The practice of using crude oil as a coating on highways was legally accepted in the United States as well as in Ecuador.
  • General health statistics in the province of Napo do not reveal any negative effects directly caused by the oil operations.
    • The health standards of the province are in line with the generally improving rate throughout Ecuador.
    • Infant mortality and mortality from childbirth are actually below the national average.
  • Damages were caused by sabotage or natural events (such as the serious earthquake of 1987), and in no case by negligence or malpractice.
    • Crop damage and farming problems in the area were due to factors such as soil quality, agricultural systems, and lack of farmers' technical ability.
    • Many other public and private oil companies have also operated in the area.
  • The overwhelming deforestation occurred outside the oil operation areas and was the result of an explicit and aggressive government policy of colonization and the resulting activities of inhabitants.
    • Less than 2,600 hectares of deforested land can be attributed to the operations of the PetroEcuador and Texaco Petroleum Company consortium- this is less than 0.5% of the area designated for oil production, and only .02% of the Ecuadorian rainforest.
The Government of Ecuador and four separate municipal governments released Texaco Petroleum Company, Texaco Inc. and all other related entities from all liability regarding the oil operations in Ecuador following completion of remediation activities and funding of social programs. Therefore, there is no basis for the litigation.
  • In 1998, the Ecuadorian government certified that Texaco Petroleum satisfactorily completed the required remediation action plan and complied with three stipulated socioeconomic compensations.
    • The government of Ecuador and PetroEcuador then released Texaco Petroleum Company, Texaco Inc. and all other related companies from any claim.
    • The environmental remediation work conducted by Texaco Petroleum received the "Engineering Excellence" award from the American Consulting Engineers Council.
  • In return for significant monetary settlements, the municipalities of Nueva Loja, Shushufindi, La Joya de los Sachas and Francisco de Orellana released Texaco Petroleum from liability.
  • Plaintiffs' lawsuits seek the same type of sweeping environmental relief for which Texaco Petroleum Company, Texaco Inc. and all other related entities have already been released through settlement agreements with local communities and the government of Ecuador.
The operations complied with prevailing Ecuadorian laws and industry regulations as well as with the standard technical practices of the time.
  • Texaco Petroleum Company always worked with the technology that was consistent with generally accepted international standards at the time it operated the fields in Ecuador.
    • The technology used by Texaco Petroleum Company was common in several other tropical or semi-tropical countries such as Angola, Brazil, Colombia, Indonesia, Mexico, and Nigeria.
  • Audits affirmed that the appropriate technology was used and did not violate current practices in the industry at the time.
ChevronTexaco cannot be responsible for actions of third parties.
  • Under the original terms of the Joint Operating Agreement, the state oil company agreed to hold Texaco Petroleum Company (the project's operator) harmless from third-party complaints and claims.
  • Two separate audits showed that significant damages occurred after Texaco Petroleum ceased operations in 1990.
Environmental and labor laws referenced in the lawsuit are not applicable.
  • The statute of limitations for the claims of damages has expired.
    • According to the Ecuador Civil Code claims of damages must be brought within four years of alleged activity.
  • The Ecuadorian legal system has a general principle of non-retroactivity of laws. Therefore, it is not appropriate to hold operations responsible for meeting the requirements of a law or regulation that did not exist at the time of the operations.
    • Neither Article 15 of Agreement 169, nor the Constitution of 1998, nor and the Environmental Management Act (issued in 1999) were in effect in Ecuador at the time of the alleged damages.
The Ecuadorian government and the Energy Ministry controlled the entire operation and should be held responsible for any issues resulting from the operation.
  • PetroEcuador, the state oil company, held the majority interest, obtained the majority of benefits and strictly controlled the operations under the 1973 Contract.
    • The government approved each and every step in the planning and operating phases of the consortium.
    • The Ecuadorian government received approximately 95% of total earnings while the contract with Texaco Petroleum was in effect.
    • Texaco Petroleum's minority stake in the operations never exceeded 37.5%.
  • Since 1992 when the consortium expired PetroEcuador has been the sole owner and operator of the oil fields.
  • Despite numerous unfounded allegations to U.S. courts, the New York court ruled that plaintiffs' were never been able to demonstrate that Texaco Inc. conceived or approved the decisions related to the exploration methods, procedures, and techniques used by Texaco Petroleum Company. In fact, plaintiffs' attorneys stipulated to the U.S. court that they could not find any evidence to support this claim.
    • The only participation of Texaco Inc. in the operations was its indirect investment in its fourth-tier subsidiary, Texaco Petroleum Company which according to the New York court would not serve as a basis for liability.

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