Residents take Texaco to court in US
US oil company Texaco ceased operations in Ecuador five years ago. Texaco left behind hundreds of waste pits full of with arsenic, lead and other heavy metals. Some are still used by Petroecuador, the government-owned company that took over where Texaco left off. The pits are at the centre of a lawsuit against Texaco lodged in New York on behalf of indigenous people and settlers of the Ecuadorian Amazon. Texaco is being sued for more than $1 billion to repair the damage caused by the company and compensate residents affected by the company's operations.
If the judge agrees to hear the suit, it would be the first trial of an American corporation for causing environmental damage in a developing country.
According to Cristobal Bonifaz, the attorney who filed the suit back in November 1993, Texaco "created a low standard of environmental protection unique to the country and made billions". Christobal, who was born in Ecuador but is based in the US, claims that it is the indigenous people of Ecuador who are paying for the company's excesses. He said the company had made $5 billion in Ecuador. Texaco says its profits were much smaller and that it complied with the environmental standards set down by the Ecuadorian government.
Environmentalists contend that Texaco exploited the lower environmental standards in Ecuador. In the United States, oil companies are required to return the "production waters" that come to the surface with petroleum back underground. This costs them around $1 million per well.
According to Accion Ecologica, an average of 5 million gallons of waste water per day found its way into local waterways during Texaco's 20 year stint in Ecuador. Accion Ecologica is Ecuador's leading environmental organisation.
In September 1995, Texaco signed a deal with the government of Ecuador, in which it agreed to properly close its abandoned wells, regenerate the rainforest and clean up waste pits which were not passed on to Petroecuador. However, environmentalists say the terms of the agreement are not adequate to clean up the damage done by Texaco.
The Ecuadorian government would administer any funds accruing from the lawsuit. However, Ecuador's ambassador to the US says that the case should be heard in Ecuador, not the US. The consequent uncertainty over whether his government wants the money or not is perhaps the biggest obstacle to whether the suit will proceed.
Leaders of Ecuador's 21 congressional committees, on the other hand, passed a unanimous resolution supporting the lawsuit in the United States.
The root of Ecuadorian uncertainty over the lawsuit is the country's dependence on oil revenue. Newly signed international debt agreements commit Ecuador to an annual economic growth-rate of 5% over the next 20 years. If the country fails to achieve this, it will be in default of its loan repayments, and officials in Ecuador fear that other oil companies may pull out of the country if the suit against Texaco is successful.
Fabian Sandoval, the head of Ecuador's presidential commission on the environment summed up the prevailing mood: "We have to keep producing,".
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The recently-elected government of President Abdala Bucaram announced on August 23 that it would be suspending the local activities of multinational oil corporation, Maxus. Environmentalists and local oilworkers welcomed the move.
Some observers see the move, and the threat to militarise the oil company's installations in the Amazon, as manouevres to create better conditions for future contracts with oil companies. There have been indications from the president of the state-owned Petroecuador that concessions to the 10 other foreign oil companies in Ecuador will also be reviewed. Petroecuador regulates all oil operations in the country and monitors the performance of companies seeking concessions for oil exploration.
Ecuador is Latin America's third-largest oil exporter. Fifty percent of the country's budget revenue comes from oil exports, and this situation is expected to continue for the next 15 years at least.
Maxus has become the target of severe criticism from environmentalists and indigenous communities, which demanded that the State apply stringent controls on the company's operations. I welcoming the government's announcement, environment group Accion Ecologica said Maxus has been criticised more than any other oil corporation in Ecuador's history.
In announcing the decision to suspend Maxus activities, Energy Minister Alfredo Adum said ''I am not concerned about the actions that the transnational's executives may take'' . Adum contends that Maxus overstated its costs in order to maximise its profits under the terms of a deal struck with the government. Observers have warned that the new government's move may discourage other oil corporations from investing in Ecuador.
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