Lago Agrio oil field
|Lago Agrio oil field|
|Start of production||1972|
The Lago Agrio oil field is an oil-rich area in the Ecuadorian province of Sucumbíos near the city of Nueva Loja, discovered in the 1960s. The Lago Agrio field is known internationally for the serious ecological problems that oil development has created there, including water pollution, soil contamination, deforestation and cultural upheaval.
Since 1993, lawyers representing local residents have sought to force former well operator Texaco and its now parent company Chevron Corporation to clean up the area and to provide for the care of those allegedly affected. In February 2011, an Ecuadorian court ordered Chevron to pay $8 billion in compensation, a ruling the company called "illegitimate" and vowed to appeal. In March 2014, a court found that the 2011 verdict was obtained by the plaintiffs against Chevron through "coercion, bribery, money laundering and other misconduct."
Development and ownership
In 1964, Texaco Petroleum Company (TexPet) began exploring for oil in northeast Ecuador, in an area which was inhabited by indigenous people. The following year it started operating a consortium owned equally by itself and Gulf Oil, to develop a tract in the area. Nueva Loja was originally founded as a base camp of Texaco. The consortium struck a gusher in 1967 and began full-scale production in 1972. The Ecuadorian government, through its national oil company CEPE, now Petroecuador, obtained a 25 percent interest in the consortium in 1974. Gulf subsequently sold its interest to CEPE. By 1976, the consortium was majority-owned by the Ecuadorian government. TexPet transferred management of the consortium to Petroecuador in 1990. TexPet's concession expired in 1993, leaving Petroecuador as the sole owner. Petroecudaor continues drilling in the area.
Over a period of 20 years, the Lago Agrio field produced 1.7 billion barrels (270×106 m3) of oil with a profit of $25 billion. According to Chevron, 95 percent of the profit from the consortium went to the government.
At the close of the oil boom there remained as many as 16 million gallons of spilled crude oil. An estimated 18 billion gallons of produced water had been diverted into open pits. The produced water contained polycyclic aromatic hydrocarbons at levels many times higher than permitted in the US, where produced water is typically re-injected underground. Ecuadorian President Rafael Correa, visiting the region in 2006, remarked "Let’s not deceive ourselves. There was a crime against humanity here." Environmental activists blame these pollutants for present-day contamination of the water supply and for a 150% increase in cancer cases in the community and region. Chevron and its supporters maintain that no causal link between the produced water and cancer has been shown and that most of the crude spills occurred after Texaco withdrew.
In 1995, amid litigation, Texaco agreed to clean a number of waste pits in proportion to its interest in the consortium, at a cost of $40 million. In exchange, the Ecuadorian government released Texaco from further liability. Chevron has used this agreement as its primary defense against the ongoing legal claims, although numerous sources show the remediation efforts to have been largely cosmetic.
Lawyers for the indigenous residents of the Lago Agrio field sued Texaco in New York in 1993. The 30,000 member class-action lawsuit accused TexPet of discharging produced water into open pits, contaminating the water that was used by the locals for fishing, bathing, and drinking. The case was dismissed for improper venue in 2001, and another case was filed in 2003 in Ecuador.
Chevron claims that the company is being unfairly targeted as a deep pocket. It maintains that responsibility for damage and cleanup now lies with Petroecuador and the government, and contends that much of the present damage comes from Petroecuador's activities since 1990, including spills from a pipeline system built by the consortium that Petroecuador has not maintained.
In 2008, a court-appointed expert issued a report accusing Texaco employees of not only widespread pollution, but deforestation and cultural destruction as well. The report estimated the damages by TexPet between $8 billion and $16 billion, which the expert later increased by $11 billion.
Cristóbal Bonifaz, the lawyer who had filed the initial action in New York in 1993, was dismissed from the litigation in 2006. He went on to file a case against Chevron in 2007 on behalf of new clients who claimed that pollution had given them cancer. The court found that three of the plaintiffs did not have cancer. After dismissing their claims (leaving two claims active), the court imposed a $45,000 fine against Bonifaz for making frivolous claims.
Attorney Pablo Fajardo, who represents the plaintiffs, and activist Luis Yanza received the Goldman Environmental Prize in 2008 for their work in this case. The prize is considered the most prestigious award for environmental protection in the world.
In August 2009 a video surfaced showing an alleged member of Ecuador's ruling party, Alianza PAIS, bribing Judge Juan Núñez, who is the presiding judge in the case. In the video, the judge agreed to rule against Chevron, to deny Chevron's appeals, and also discusses the allocation of the $3 million bribe between himself, the president, and the plaintiffs. The video also shows discussion regarding the awarding of remediation contracts that would result from a ruling against Chevron. The judge was forced to resign. Chevron claims it had no involvement in the videotaping, however in April 2010 it was found that one of the men involved in the filming was a long-time Chevron contractor, who in turn was later caught on hidden camera saying he "has enough evidence to ensure a victory by the Amazon communities if Chevron failed to pay him what he was promised". This man was later relocated to the United States with his family at Chevron's expense, where he is also receiving an undisclosed amount of living expenses. The other man involved in filming the video is a convicted drug smuggler.
Chevron had acquired outtakes of the 2009 documentary Crude which covers part of the case. The outtakes suggest that Donziger considered the Ecuadorian system of justice to be corrupt and had urged Ecuadorian President Rafael Correa to issue criminal indictments against two Chevron lawyers involved in the settlement negotiations of the late 1990s. The two lawyers were subsequently indicted. When Donziger was ordered to testify about this in the U.S. federal case, he claimed attorney–client privilege but was rebuked by the judge. Donzinger subsequently was forced to hand over all his case files, his computers, his tax returns and bank account information to Chevron and he was deposed under oath. Donzinger's diary, which had been stored on one of his computers, became a matter of public record. The deposition revealed that the above-mentioned report by a court-appointed expert had largely been written by an environmental consultancy company hired by the plaintiffs.
In February 2011, Chevron filed suit in New York against Donziger and several other people involved in the plaintiff's case, invoking the RICO Act and alleging extortion and fraud in that they made up evidence and tried to manipulate the legal system of Ecuador.
Plaintiffs in the Ecuadorian court case had initially demanded compensation payments of $27 billion. When the court ordered Chevron to pay $18 billion in February 2011, the company vowed to appeal, calling the ruling "illegitimate" and "unenforceable in any court that observes the rule of law", and said that "the United States and international tribunals had already taken steps to bar enforcement of the ruling." Plaintiffs were also planning to appeal, as a recent report put the damages at $113 billion.
Chevron had obtained an injunction by a U.S. federal judge, preventing the plaintiffs from collecting on the Ecuadorean judgement anywhere in the world. This injunction was overturned by the Second Circuit Court of Appeals in September 2011.
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