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ID : 021163 Document last changed 1994/04/28
PUB : CHRONICLE, 4/28/94, ECUADOR: INDIAN GROUPS SUE TEX
DATE : 04/28/94
<HEAD> ECUADOR: INDIAN GROUPS SUE TEXACO OIL
COMPANY FOR DAMAGES TO AMAZON RAIN FOREST
Indigenous residents of the Amazon rain forest in
northeastern Ecuador have filed a lawsuit in New York asking
for compensation from the US oil company Texaco for damages
caused by its oil exploitation in the region. Although it has
recently shown some support for the Indian's grievances, the
Ecuadoran government, hard pressed for export earnings to
finance payments on the foreign debt, is pushing for more,
rather than less, drilling.
The Ecuadoran Amazon covers more than 131,000 sq. km.,
48% of the national territory, and includes some of the
continent's major sources of biodiversity, as well as non-
renewable natural resources such as oil. It is also home to
100,000 indigenous from five different nations.
The US-based oil company Texaco is recognized as the
pioneer in Ecuador's petroleum industry, since it was the
first company to discover the vast oil reserves in Ecuador.
Texaco began exploration in 1964, forming a consortium that
included the Ecuadoran state company Petroecuador. Texaco's
discoveries changed Ecuador's export profile, converting the
country from a predominantly agro-exporting nation into an oil
exporter. Texaco's contract to exploit the reserves, however,
expired in 1990, and by 1992 it had turned over its entire
operation to Petroecuador.
Although Texaco is no longer involved, oil wells that it
developed are responsible for 80% of the 371,000 barrels per
day produced in the Ecuadoran Amazon, of which 246,000 bpd is
for export. Oil accounts for about 50% of Ecuador's export
earnings, although ecotourism in the same Amazonian rain
forest is also an increasingly important source of revenue.
During recent years, indigenous residents of the rain
forest have become more and more critical of the effects of
oil production on their health and environment. In November
1993, the Cofan and Secoya Indians filed a US$1.5 billion suit
in the US against Texaco for damages to the environment
incurred during the years that Texaco was responsible for oil
production.
The lawsuit by the Indians accuses Texaco of not
complying with technical norms set for processing toxic waste,
which resulted in extensive damage to the health of residents
and caused irreparable damage to the flora and fauna. They
say Texaco dumped about 3,000 gallons of oil per day into
lagoons in the area. Moreover, there have been 30 major leaks
in pipelines and holding tanks, resulting in the dumping of
450,000 barrels of crude oil directly into the Amazon basin
since exploration began.
Environmental groups are supporting the Indians' action.
They claim that oil spills and inadequately disposed of
chemical wastes constitute major health hazards to the
region's people. According to environmentalists, toxic wastes
dumped in the region's rivers put the indigenous peoples at
risk of contracting cancer and gastrointestinal and
respiratory diseases. They say it is impossible to use the
rivers' water for drinking or for bathing, and thousands of
species of flora and fauna have disappeared.
Residents say they can no longer drink the water or bathe
in the lagoons in the region. Even walking on the roads is a
problem, since the oil stains their feet and clothing.
A recent water sample study by the Center for Economic
and Social Rights, a New York-based health and human rights
group, confirmed the health risks in the region.
"Drinking water, bathing water, and fishing water
contained levels of toxic oil constituents many times greater
than the safety guidelines set by the United States
Environmental Protection Agency," read the report.
The report also emphasized that a study of 1,465 Amazon
basin residents showed that, "Those exposed to the oil had a
higher occurrence of abortion, elevated rates of fungal
infection, dermatitis, headache, and nausea."
Although the Texaco operations accounted for most of the
drilling in the Ecuadoran Amazon, other companies with smaller
operations also added to the damage. A chemical spill in 1992
in the Napo River, which occurred when a barge belonging to a
subcontractor of the US firm Maxus sank, dumped 1.5 tons of
drilling chemicals into the river, causing irreversible
damage. The Napo River provides the only source of drinking
water to the area's inhabitants, who also depend on fish from
the river for food.
The state company Petroecuador did an environmental
impact study in 1991 that confirmed the damaging effects of
oil production. The report showed that most of the company's
364 wells do not meet basic requirements necessary to avoid
damage to the environment. At least 226 of the company's
wells were found to spill crude into the surrounding areas and
almost all the wells had pools of accumulated oil with no
drainage. Petroecuador's study showed that in some areas, 94%
of the flora and fauna had been eliminated.
In 1992 Texaco and Petroecuador contracted a Canadian
firm, HBT-Agra, Ltd., to study 400,000 hectares in the Amazon
basin. It cited spills at 93 wells and drilling sites between
1973 and 1990, resulting in 450,000 barrels of crude being
spilled into the area.
The Canadian firm recommended that Petroecuador and
Texaco pay US$8 million in compensation to replace machinery
and pay the government unpaid back taxes. In addition, HBT-
Agra said it would take US$13.2 million more to repair the
damage done to the environment during Texaco's operations in
Ecuador.
However, direct damages from oil drilling are only part
of the picture. Extensive logging to clear the way for roads
and other infrastructure needed for oil exploration have also
brought major changes to the ecological balance in the
delicate rain forest.
In March 1993, Petroecuador began unauthorized logging of
virgin tropical forest in Cuyabeno, an area covering 650,000
hectares. The company plans to clear 10,000 ha. in the area
to construct roads, drill wells and lay pipeline. In
addition, the influx of oil workers, their families, and other
settlers also results in major changes in the ecological
balance in the area by clearing large areas of rain forest and
turning it into cultivation and grazing land.
Until now, the lawsuit presented against Texaco by the
Ecuadoran Indians has focused on jurisdictional rights.
Courts in both Texas and New York originally said that the US
did not have jurisdiction in the matter, since the alleged
damages occurred in Ecuador. Lawyers for the Indians argued
that the US does have jurisdiction since Texaco is based
there.
Adding to the controversy, the Ecuadoran ambassador to
the US, Edgar Teran, asked the US State Department to
intervene, asserting that if US courts agree to hear the case
it would constitute a violation of Ecuador's sovereignty.
Teran's request brought strong criticism from the
Confederation of Indigenous Nationalities (CONAIE) and
Ecuadoran environmental groups, who accused Teran of siding
with Texaco.
While supporting Teran's contention that the matter
should be resolved in Ecuadoran courts, Ecuadoran Minister of
Energy and Mines Francisco Acosta said on April 21 that if
Texaco does not agree to pay for environmental damages that
occurred during its years of operation, the Ecuadoran
government itself would initiate legal action against the
company.
The suit by the Ecuadoran Indians took a major step
forward with an April decision by a New York court to hear
arguments to determine whether the US has jurisdiction. The
ruling was seen as a victory, even though lawyers for the
Indians admit they have a long way to go. If the case is
eventually heard in a US court, it could set a precedent to
force US oil companies to apply the same safety and
environmental standards in their foreign operations that are
in effect in the US.
Texaco representatives insist the company is not legally
responsible for damages in the Ecuadoran Amazon, since it
turned over its operations to Petroecuador four years ago.
They said Texaco did not violate any existing legislation
during the time it managed the operations.
While Texaco has said it would pay a share in the cost of
clean-up operations, it will not pay the Indians or the
Ecuadoran government damages for environmental destruction.
Texaco executive Ricardo Reis Veiga said that Texaco's share
of clean-up costs should be 37.5% and Petroecuador's 62.5%
since they were both part of the consortium that controlled
oil production. Reis Veiga also denied that Texaco operations
had adverse effects on the health of indigenous inhabitants of
the region and he said it was unlikely that Texaco would
negotiate with the Indians to reach an out-of-court
settlement.
Meanwhile, the Texaco controversy may yet encourage
Indian groups to initiate action against other foreign
companies, such as the US firm Maxus. Maxus began operations
in a particularly fragile area of the Amazon is eastern
Ecuador several years ago. The area is home to the Huaorani
Indians, whose numbers have diminished from 15,000 in 1960 to
about 2,000 today.
Maxus was allowed to begin drilling operations in the
area, which is part of the UNESCO-designated ecological
reserve of Yasuni Park, after supposedly reaching agreements
with the Huaorani. The Ecuadoran government saw the
operation, which produces 15,000 bpd, as a demonstration of
cooperation between the government, oil companies, and
indigenous communities.
However, the Huaorani community is badly divided
regarding the presence of the oil company, and many are as
concerned about the destruction of their culture as about
their environment. In March a group of Huaorani opposed to
the presence of the oil company petitioned the Ecuadoran
government to stop all oil exploitation in their homeland
until 2006. That request was denied.
Despite all the damaging effects of oil production and
opposition from the indigenous who inhabit the areas where oil
exploitation takes place, Ecuador is still very dependent on
oil income, making it likely that the government will continue
to aggressively promote petroleum exploration and
exploitation. Ecuador withdrew from the Organization of
Petroleum Exporting Countries (OPEC) in 1993, in part to pave
the way for a vigorous expansion of oil exploration and
production. The government's goal is to increase national
output by one-third by 1997. An estimated US$30 billion worth
of oil reserves lay beneath the surface of the Ecuadoran
Amazon.
Energy Minister Acosta has assured investors that the
suit against Texaco will not adversely affect the awarding of
new exploration contracts, for which bidding began in January.
Acosta said new contracts are expected to be signed in
September or October for exploration and extraction of oil in
areas that include three sectors in the Gulf of Guayaquil,
nine in the Amazon, and various others in the northeast near
the Colombian border.
Foreign companies already operating in Ecuador include
US-based Arco, Maxus, Oryx and Occidental; the French company
* Elf Aquitane; and BRAZIL's Braspetro. The government plans to
open up 400 km. of roads during the next two years to
facilitate new oil exploration and exploitation.
At the same time that it encourages increased oil
exploitation, however, the Ecuadoran government does try to
demonstrate a concern for environmental safety. In February,
the government hosted a seminar on biodiversity in the Amazon,
in which delegates from the participating countries, including
Ecuador, made commitments to conserve the biodiversity of the
region, to promote rational use of the region's resources, and
to respect the indigenous communities who live in the area.
Participants also called on each country to pass legislation
setting penalties for those who cause ecological damage to the
Amazon. (Sources: Deutsche Press Agentur, 01/26/94; New York
Times, 11/04/93, 03/22/94; Latinamerica Press, 02/20/92,
08/13/92, 05/20/93, 06/24/93, 04/14/94; Agence France-Presse,
04/19/94; Notimex, 11/06/93, 02/25/94, 04/19/94; Inter Press
Service, 04/21/94, 04/22/94)