ECUADOR: THE PEOPLE VS. TEXACO
The legacy of Texaco's 20 year sojourn in Ecuador is a wasteland in the heart of the Amazon. Environmentalists and the indigenous movement have launched a campaign that may force the oil company to clean up its mess.
By Glenn Switkes
The road from Lago Agrio to Shushufindi parallels the trans-Ecuadorian pipeline, a structure which throbs with the pulse of Ecuador's liquid wealth. Sad fragments of what was once the richest tropical rainforest on the planet stand along the roadside. The car's tires squish along the oil-soaked road. Each time it rains–and Ecuador's Amazon is one of the wettest places on earth–oil washes into roadside ditches, and from there into streams and rivers. A cap of oil is clearly visible on one such stream near Shushufindi. A barrel-chested colono–a mestizo settler–removes his shirt and kneels to bathe in the oily water. Two young women arrive with stewing chickens, which they clean in the polluted stream.
Shushufindi, a refinery town ringed by about 65 working oil wells, is a chaotic patchwork of muddy streets and tawdry shacks. From the refinery's stacks, flames burning around the clock emit clouds of smoke, casting a hellish tinge over the town. A few miles north of town, an oil-well head sits in the center of a clearing. At the clearing's edge is a pool, about 20 yards in diameter, which contains oil the consistency of tar. The black pool is uncovered, unfenced, and unlined. Rusting oil drums have been carelessly discarded nearby. Several bear the logo of the departed giant of Ecuador's Amazon: "Texaco."
For 20 years, Texaco dominated Ecuador's burgeoning oil industry. Using environmental-management techniques far below international standards, the company severely polluted the Oriente–the Amazonian region in the eastern third of the country–and destroyed the lives of the indigenous people and small farmers who live there.
The story of oil companies sacking Third World countries and then leaving their mess behind is a common one. What may be unique about the saga of Texaco in Ecuador is that increasing pressure on the company may force Texaco to clean up the waste it abandoned in the rainforest. An environmental campaign in Ecuador, an international boycott, and a class-action lawsuit in U.S. Federal Court have left Texaco reeling. They have also presented a significant obstacle to the Ecuadorian government in its march along the path to total dependence on an oil-export economy.
Texaco came to Ecuador in 1964. The company received an exploration contract from the then-military government, which saw the development of the country's Amazon oil reserves as a way of augmenting the military's presence in border areas. In 1972, Texaco signed a 20-year contract with the Ecuadorian government which gave the company a virtual monopoly over oil production. Gulf Oil participated as a passive investment partner in the Texaco consortium, but it was Texaco which operated the oil facilities, taking responsibility for both production and environmental controls in a concession area which grew to cover five million acres. In all, about 88% of the oil extracted from the Oriente through 1992 was pumped by Texaco and its partners. The deal guaranteed Texaco and its partners 93% of the profits with the remaining 7% going to the government. The government also granted the company a 20-year tax holiday.
For Ecuador, the arrival of Texaco provided an opportunity for the country to join the ranks of world oil producers. Texaco promised to install the latest technologies at its facilities, which the production contract stipulated would revert back to the Ecuadorian government in 1992. In 1972, the company began construction of the trans-Ecuadorian pipeline, an engineering feat which pumped oil over the Andes Mountains to a refinery at the port of Esmeraldas in the northwestern part of the country.
After 1977, when Gulf sold its holdings to the state oil company, CEPE, Texaco was allowed to keep only 37.5% of the oil it pumped, while the Ecuadorian government received 62.5%. In 1990, Texaco shut down its operations, after pumping more than 1.2 billion barrels of crude oil from 325 wells drilled two miles deep beneath the Ecuadorian rainforest.
By the time Texaco left Ecuador, oil ruled the nation's economy, generating over half of the government's income. Texaco opened the door for other transnational companies. Occidental, ARCO, Maxus Energy, Oryx, Elf-Aquitaine, and Braspetro have all become involved in recent years in the search for new oil fields in the Amazon.
At the time Texaco entered Ecuador, there were no environmental laws regarding oil development, although Ecuador's Constitution guarantees the right "to live in an environment free from contamination." Later, with the enactment of the Hydrocarbons Law of 1971 and the signing of Texaco's production contract, the company was required in principle "to adopt appropriate measures for the protection of flora, fauna, and other natural resources, as well as to avoid contamination of waters, air, and the land." Subsequent regulations also mandated pollution-control measures and remedial clean-up of polluted facilities. In practice, these regulations were never enforced.
In her 1990 book Amazon Crude, a landmark study of Texaco's legacy, environmental lawyer Judith Kimerling sifted through Ecuadorian government documents to quantify the damage Texaco had wrought. Kimerling documented 30 spills from breaks in the Texaco-built trans-Ecuadorian pipeline. All told, a gigantic spill of 16.8 million gallons resulted from these breaks-50% more than the Exxon Valdez spill. In addition to these leaks, she noted numerous other spills from connecting pipelines, wells and tanks. According to Kimerling, Texas abandoned 1,000 uncovered oil-waste ponds, and discarded 20 billion gallons of toxic production waters and four million barrels of drilling mud without treatment. Texaco also routinely burned excess gas (about 40 million cubic feet per day) and waste oil, which has fouled the pristine air of the Amazon. The construction of a network of 300 miles of roads opened the Amazon to a wave of colonization, and led directly to the clearing of more than two million acres of rainforest.
When Texaco pulled out of Ecuador in 1992, Manuel Navarro, director of the Environmental Protection Unit of Petroecuador, CEPE's successor, proposed an independent "environmental audit" of Texaco's operations. The Canadian environmental consulting firm, HBT Agra, was hired to conduct the study, which was jointly funded by Petroecuador and Texaco.
The HBT Agra study confirmed that 41% of Texaco's well sites have a "high environmental liability" and that 60% of the company's waste pits have not been able to contain oil wastes. The study also acknowledges that "Texaco's operations prior to 1990 were potentially not in compliance with Ecuadorian law."
Due to political maneuvering between Texaco and the Ecuadorian government, the HBT Agra report still remains in "draft" form two years after it was originally commissioned. Critics say the study does not go far enough in fully assessing Texaco's responsibility to the land and people of the Ecuadorian Amazon. They cite the fact that the study's reference levels for pollutants are far higher than public-health standards set by the U.S. Environmental Protection Agency (EPA). In addition, only 21 water samples were drawn from waterways downstream from Texaco facilities, which provide a truer indication of the impact on local populations than water samples collected onsite. Significantly, none of the indigenous people or farmers who claim health problems caused by Texaco's pollution were consulted for the HBT Agra study.
The controversy over Texaco's environmental legacy in Ecuador was heightened by the release this March of an independent report by the New York-based Center for Economic and Social Rights (CESR) which found serious public-health threats from Texaco's pollution. CESR's team of doctors, scientists and lawyers from Harvard University found levels of cancer-causing polycyclic aromatic hydrocarbons (PAHs) as much as one thousand times greater than U.S. EPA safety guidelines. Doctors also found "an increased risk of serious and non-reversible health effects such as cancers and neurological and reproductive problems" in local communities which drink, bathe, and cat fish from the contaminated water supplies.
The indigenous peoples of the Oriente–some of whom had their first contact with Spanish–speaking Ecuador during the oil boom–have been the most severely affected by Texaco's operations. Texaco's entry into the Oriente devastated the Siona, Secoya, Cofint, Quichua, and Huaoram peoples, who were displaced from their traditional homelands with the arrival of the oil company, the Ecuadorian military, evangelical missionaries, and land-hungry settlers.
Texaco's first well was drilled in Lago Agrio, site of a village of the Tetete people, an indigenous group that is now extinct. Shushufindi, where Texaco built its main Amazon refinery, was a Cofán indigenous village. The Cofanes have seen their population depleted from about 3,000 to only 300.
Rivers and streams upon which indigenous people depended for fish turned black with oil. Once-abundant game were frightened away by explosions used in oil prospecting, or were hunted to extinction by oil workers and settlers. Indigenous women were forced into prostitution, and children suffered from diseases unknown before oil was found on their lands.
The national debate about Texaco's responsibility to Ecuador really began once the company left the country. No longer providing income to the state oil bureaucracy or jobs to locals, Texaco became the object of a campaign that brought together environmentalists, the indigenous movement, and Ecuadorian nationalists. The campaign has succeeded in pegging Texaco as a symbol of the irresponsibility of transnational oil corporations. Forming a coalition called the Campaña Amazonia por la Vida (Amazon for Life Campaign), environmental and indigenous activists called for a boycott of Texaco products, an appeal which was enthusiastically backed by their supporters in Europe and the United States. This January, opposition leaders in the Ecuadorian Congress demanded and obtained the release of the HBT Agra study, which the government had until then shielded from public scrutiny.
Paulina Garzón, a member of Quito's environmental activist organization Acción Ecológica, has helped spearhead the campaign. "Now is the moment when we are harvesting the fruits of our work," says Garzón. "Pressure against Texaco is helping to force the Ecuadorian government to change its attitude. But they are still dragging their feet on involving local people in the discussion of how the Texaco clean-up should be handled."
Texaco received another jolt in its efforts to close its books on Ecuador in a courtroom only a few miles from its Westchester headquarters. Cristóbal Bonifaz, a lawyer from a well-connected Ecuadorian family, joined with the Philadelphia law firm Kohn, Nast, and Graf to bring suit against the oil company in New York Federal Court. The class-action suit, filed in November, 1993, seeks $1.5 billion in damages from Texaco to be invested in a clean-up of company-caused pollution. Environmental lawyer Judith Kimerling–representing Quichua and Coftin Indians–has also joined the suit.
Texaco's defense team is headed by former U.S. Attorney General Griffin Bell. Bell's first step was to argue that New York was an inappropriate venue for the suit, which he said should have been brought in Ecuador. The Ecuadorian government also intervened on Texaco's behalf, protesting that the suit was a violation of the country's sovereignty. The government views the Texaco affair as an undesirable distraction from President Sixto Durán Batten's master plan to double the country's oil production by 1996.
In response, Bonifaz' team of lawyers contended that the ineffectiveness of Ecuador's legal system in class-action suits and widespread prejudice against indigenous people in Ecuador preclude the plaintiffs from receiving a fair hearing in their own country.
The suit was considered a long shot at best, since few successful precedents exist for foreign citizens suing transnational corporations in U.S. courts. This April, however, Judge Vincent Broderick ruled that he would agree to hear the case in New York if a search of Texaco's files can establish that decisions affecting management of Texaco's Ecuador operations were made in the company's U.S. offices.
With consumers and the media challenging Texaco's environmental record in Ecuador, the company has sent out a form letter stating that the company "complied with the prevailing laws and regulations" of Ecuador and "followed international oil field standards and practices." “It was the government of Ecuador," the letter argues, "that chose to develop the country's natural resources to improve the economic well-being of its people, and actively encouraged resource development and colonization of the Amazon Basin."
The HBT Agra study sets the price tag at $13.2 million for a clean-up of Texaco's pollution. Texaco executives would be relieved to pay that amount, compared with the $1.5 billion requested by plaintiffs in the lawsuit. Furthertmore, by limiting their liability to the share of the profits the company received over the 20 years of the concession, Texaco has suggested in conversations with the Ecuadorian press that a settlement in the range of $5 million might be appropriate. Environmentalists say this amount would be grossly inadequate.
"I'm not making excuses." Texaco Vice-president Yorick Fonseca insists. "We do plan to remediate whatever damage is identified. We had a limited, localized impact. that can be easily remediated within a short-term period." Manuel Navarto, the former director of Petroecuador's environmental unit, sees the problem as more serious. "Twenty years of deliberate technological omissions and contamination cannot be solved overnight," he says. "The actions and the resources that are needed are immense."
On August 3, the government announced that it had reached an "informal" agreement with Texaco to clean up the environmental damage the company had wrought. The government said that the accord meant that it didn't have to take Texaco to court, as it had earlier threatened. Indigenous groups immediately denounced the verbal accord, which does not specify costs, a time frame, or forms of reparation. "We cannot accept an arrangement in which there is no formal comitment," said a spokesperson for the Confederation of Indigenous Amazonians (CONFENIAE).
This May, Ecuador presided over a new round of oil licensing. On paper, the country has become more insistent that oil companies operating in Ecuador formulate plans to protect the environment. Yet, enforcement of environmental regulations remains extremely lax. Only token efforts have been made to consult and negotiate with the indigenous people on whose land the oil is found. There has also been a complete lack of public debate about whether the Ecuadorian economy should be so dependent on oil. Alternative development scenarios for the Amazon–including eco-tourism, the processing and marketing of rainforest pharmaceuticals, and agroforestry–are not in the government's plans. The planned privatization of Petroecuador, spurred by a loan from the World Bank, would place critical decisions about oil-development planning in the hands of transnational corporations.
Ecuador's new Amazon oil concessions–awarded to U.S. firms Amoco, Mobil, Oryx, Santa Fe Minerals, Triton Energy and Clapson, the United Kingdom's City, and the Ecuadorian company Tripetrol–directly affect national parks and other zones designated for ecological protection. Much of the two million acres of oil concessions are on indigenous lands. This has prompted the nation's two principal indigenous confederations–the Confederation of Indigenous Nationalities of Ecuador (CONAIE) and CONFENIAE–to demand a 15-year moratorium on new oil development. "These assaults on the rights of our peoples are declared acts of war," CONAIE president Luis Macas told Ecuadorian government officials. "We will resist ecological terrorism and cultural violence when it comes to our territories. We know how to defend ourselves."
Texaco set abysmal standards for oil development in Ecuador, standards which are now only slowly improving. But from now on. othei companies entering the Oriente must confront the company's specter of irresponsible development and the widespread feeling that unregulated exploration and drilling cannot take place again. The Texaco affair has increased the credibility and visibility of environmentalists, indigenous peoples and other sectors of Ecuadorian civil society. Their call for a greater voice in determining the course of their country's development policy can no longer be so easily quelled.
ABOUT THE AUTHOR Glenn Switkes is a director of Amazonia Films.
