August 02, 2015 - Page 1 EJOLT The Texaco-Chevron Case in Ecuador Fact sheet 042 Fossil Fuels & 1. Factual background Climate Justice/ Energy Texaco-Gulf operated in Ecuador for almost thirty years, between 1964 and Keywords – title 1992, in the Ecuadorian Amazon region. 1 The Ecuadorian state’s original > Texaco-Chevron concession to the Texaco-Gulf > Ecuador Amazon consortium included 1,500,000 hectares for petroleum exploration and > Oil spill exploitation. 2 However, on 4 August > Oil extraction 1973, the state signed a new contract > Texaco suit with the petroleum companies limiting the area of the concession to 491,355 ha. During this period, Texaco drilled 339 wells in 15 petroleum fields and 627 Map of Ecuador toxic wastewater pits were abandoned, http://www.sarayaku.com/mapa_sarayaku.jpg along with other elements of petroleum infrastructure. Moreover, obsolete and been presented during the legal process highly polluting technologies were used in Ecuador. Some highlights of these during these years of exploitation. The include: deforestation of 2,000,000 hectares of - Higher levels of child malnutrition land is attributed to petroleum operations (43%) compared to the population living in the northern Ecuadorian Amazon, as in areas removed from the petroleum well as massive water contamination activities (21.5%), with an infant mortality with toxic substances and heavy metals. rate of 143/1,000 births. The wastes derived from petroleum - The primary cause of death in the operations and accidental crude oil spills area is cancer, at 32% of total deaths, © 2004 Lou Dematteis – Gas have had a major effect on forests, three times higher than Ecuador’s burning outside the town of rivers, and estuaries: national average of deaths by cancer Shushufindi “It has also been estimated that the (12%) and four to five times higher than company deliberately dumped tons of in Orellana (7.9%) and Sucumbíos 1 Fajardo, Pablo and de Heredia, María toxic drilling and maintenance wastes (5.6%). Gua dalupe, “El Caso Texaco: un trabajo por la restitución de derechos colectivos y and 19 billion gallons of produced - A rate of spontaneous miscarriages de la naturaleza”, in ¿Estado constitucional wastes into the environment without 2.5 times higher in Ecuadorian Amazon de derechos? Informe sobre derechos humanos. Ecuador 2009; Universidad treatment or monitoring, despite oil communities exposed to petroleum Andina Simón Bolívar, Sede Ecuador. industry standards that suggest contamination than in similar Quito, Ediciones Abya-Yala, pp. 181-182. 2 Concessionary contract published in the reinjecting the wastes back into the communities lacking such exposure. Official Registry (RO in Spanish) 186, 21 ground. In addition to routine deliberate - Widespread death of animals from February 1964. 3 discharges, accidental spills were Hurtig, A.K. - San Sebastián, M., drinking water contaminated with crude, “Epidemiology vs. epidemiology: the case of common. During the time that Texaco falling in pits, or by asphyxiation caused oil exploitation in the Amazon basin of operated the main trans-Ecuadorean Ecuador”, Internatio nal Journal of by natural gas. The indigenous Epidemiology , Vol. 34, Issue 5, October pipeline, spills from that line alone sent populations have also lost hunting 2005, p. 1171. 4 an estimated 16.8 million gallons of Fajardo, Pablo and de Heredia, María opportunities, since forest animals are Guadalupe, “El Caso Texaco: un trabajo crude into the environment. By especially sensitive to contamination, por la restitución de derechos colectivos y comparison, the Exxon Valdez spilled de la naturaleza”, in ¿Estado constitucional noise, and deforestation. de derechos? Inform e sobre derechos 10.8 million gallons into the Prince - 75% of the population studied were humanos. Ecuador 2009; Universidad William Sound in the largest oil spill in found to use contaminated water, which Andina Simón Bolívar, Sede Ecuador. 3 Ediciones Abya-Yala, pp. 188-191. All of the history of the United States.” causes numerous types of illness. The this data is rejected by the company on its Several environmental impact studies contaminated water was used for website: 4 http://www.texaco.com/sitelets/ecuador/es/ have yielded specific data which have drinking, cooking, and bathing, not out of PlaintiffsMyths.aspx. See also the critical a lack of awareness of the hazards of commentary authored by a group made up of numerous scientists and published in a the water, but due to a lack of other letter in the Journal of Environmental and options. Occupational Health Vol. 11/No 2, Apr/Jun 2005, entitled “Texaco and its Consultants”; http://chevrontoxico.com/assets/docs/ijoeh- breilh.pdf. August 02, 2015 - Page 2 In addition to environmental impacts, Petroleum Corporation (CEPE), which numerous effects on human rights have would be replaced in 1989 by a new also been identified in the form of sexual petroleum company owned by the nation violence, discrimination, loss of lands, of Ecuador, PetroEcuador. On 6 August forced displacement as well as 1973, Texaco and Gulf signed a new considerable effects on the culture concessionary contract with Ecuador, itself 5. through CEPE. This new contract replaced the 1964 concessionary 2. International legal framework contract. It included a substantial Planeta Vital Web - Yasuni reduction in the area included in the National Park The only aspect of this case that has concession, and would remain in effect resorted to international norms is in until 1992. The contract also envisaged relation to the protection of Texaco- the progressive incorporation of CEPE Chevron’s investments in Ecuador, into the consortium, until it had acquired regulated by the Treaty between the holdings of 25%. At the beginning of United States of America and the 1974, CEPE purchased 12.5% of the Republic of Ecuador concerning shares held by Texaco and 12.5% of the Encouragement and Reciprocal those held by Gulf. Later, in December Protection of Investment 6 of 27 August of 1976, it purchased the remaining 1993. In keeping with common practice, shares held by Gulf, thereby reaching this treaty’s Article III establishes that shareholdings in the consortium of these investments will not be directly 62.5%. Texaco held the remaining expropriated or nationalised, except 37.5% of the shares, although it when this is done in the public interest, continued as the operator of the in an equitable manner, and after consortium, meaning that at no point in prompt, adequate, and effective time did either Gulf or CEPE operate in payment. Furthermore, Article II the area. paragraph 7 establishes that: “Each The 1973 contract required Texaco to party shall establish effective means by provide a percentage of its crude oil which to evaluate claims and respect the production to the government, at a price rights related to the investments, set by the government, in order to help investment agreements, and investment satisfy Ecuador’s domestic consumption authorisations.” This treaty and this needs. Texaco was allowed to export the specific stipulation have been cited by remainder of the petroleum it produced both sides in the context of the judicial for sale at the significantly higher process for the case that is the subject international market price. If Ecuador of this report. used any of the petroleum for purposes According to data provided by other than its own internal consumption, Ecuador’s State Office of the Attorney Texaco would have the right to receive General 7, in 1964 Ecuador granted the compensation at the international market company Texaco Petroleum the rights price. On 16 December 1977, the nation for petroleum exploration and production of Ecuador (through CEPE) and Texaco in Ecuador’s Amazonian region, by signed a supplemental agreement with means of a concessionary contract similar terms to the 1973 contract. established with the local Texaco In 1990, PetroEcuador assumed the role subsidiary (Texpet). of operator of the consortium. The Texaco assigned half of its holdings in parties did not agree to extend the the concession to the company validity period of the 1973 contract, Ecuadorian Oil Gulf Company, thereby which had an expiration date set for 6 5 Carlos Martín Beristain, Darío Páez Rovira, and Itziar Fernández, “Las palabras de la forming a consortium in which Texaco June 1992. Texaco, PetroEcuador, and Selva. Estudio psicosocial del impacto de las provided its services as an operator. In the nation of Ecuador therefore began explotaciones petroleras de Texaco en las comunidades amazónicas de Ecuador”; September of 1971, Ecuador created a negotiations to resolve all of the issues Hegoa, Bilbao, 2009 ; available online at government entity, the Ecuadorian State related to the 1973 contract and to effect http://pdf2.hegoa.efaber.net/entry/content/442/ Las_palabras_de_la_selva.pdf its termination. At that time, Texaco also 6 began shutting down its operations in Available at http://www.sice.oas.org/bits/usecu_e.asp. Ecuador. Between December 1991 and 7 www.pge.gob.ec/es/reglamentos.../250- December 1993, Texaco filed seven informacion -ampliada -1.html . August 02, 2015 - Page 3 claims in the Ecuadorian courts for 30,000 Ecuadorian citizens from the 8 alleged non-compliance with the 1973 Oriente region (Aguinda v. Texaco ) was and 1977 contracts, mainly related to presented before the New York federal Ecuador’s acquisition of a larger quantity courts in November 1993, under the of petroleum at the domestic market aegis of the Alien Tort Claims Act 9