July 1, 2008
Mismanagement and Oil Spills Are the Hallmarks of Petroecuador's Record
QUITO, July 1, 2008 - 18 years ago today, Texaco Petroleum Company's role as operator of the oil fields in the Oriente ended. Since that time, state-owned Petroecuador has been solely responsible for producing oil and has now done so for as long as Texaco Petroleum operated in the Oriente. In the subsequent 18 years, Petroecuador's record has been one of mismanagement and poor environmental performance, resulting in millions of gallons of Ecuador's oil spilled and wasted.
According to public records during Texaco Petroleum's time as operator, fully 95% of the oil profits went to the Republic of Ecuador in the form of royalties, income taxes and market subsidies. Specifically, of the approximately $25 billion dollars generated by the consortium, $24.5 billion went to the State, and about $490 million went to Texaco Petroleum, the minority stakeholder.
Moreover, during the course of its 18 years as operator of the oil fields, Texaco Petroleum employed operational practices that were consistent with best practices for the time and complied with Ecuador's laws and regulations. Meanwhile, since Petroecuador took over the operations of the oil fields in the Oriente, Petroecuador's record has been one of mismanagement and poor environmental performance resulting in millions of gallons of Ecuador's oil spilled and squandered.
The current environmental situation in the Oriente is largely a consequence of Petroecuador's operations and their failure to remediate in a timely manner. According to Petroecuador records, there have been more than 1,000 oil spills in the last five years. Meanwhile, newspapers report that between 1990 and 2005, Petroecuador has spilled more than 3.2 million gallons of crude oil.
Moreover, while Texpet completed a $40 million remediation and public works program under close government supervision; Petroecuador has never fulfilled its responsibility to remediate its share of the venture's production sites.
Much of this poor environmental performance can be traced to Petroecuador's poor maintenance of the equipment it took over operations from Texaco Petroleum in 1990. When Manuel Muñoz, Director National Environmental Protection Management, testified before Congress on May 10, 2006, he said:
"There is a very serious problem regarding the pipelines, regarding all transmission systems – both of oil as well as of derivatives – which have mostly become obsolete because the budget is not adequate to replace them. Mr. President, this is one of the most important sources of contamination because their useful life has come to an end and they have not been replaced, so spills occur. This is one of the most important causes of spills we face now …"
Even the attorneys pursuing the case against Chevron have acknowledged Petroecuador's poor environmental record. Pablo Fajardo, one of the plaintiffs' attorneys, said earlier this year that "It is true Petroecuador has caused an environmental disaster."
"Petroecuador's poor environmental performance is solely due to that company's neglect, mismanagement and failure to maintain the infrastructure of the oil fields. It has nothing to do with the quality of the operations or infrastructure during the period when Texaco Petroleum Company was the oil field operator," said Ricardo Reis Veiga, Managing Counsel for Chevron Latin America. "In the meantime, more than 15 years have passed since the first lawsuit was filed against Texaco. Over these many years, the plaintiffs' attorneys and activists have never filed any such lawsuits against Petroecuador. One has to question the motivation of the lawyers pursuing this litigation."
For additional information, please visit http://www.texaco.com/sitelets/ecuador/en/. To see a video on current conditions in the Oriente, please visit http://www.chevron.com/news/?VideoId=ChevronEcuador.
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