Oil Extraction and the Rights of Indigenous People in Ecuador
|Geolocation:||-1° 39' 11.3446", -76° 46' 6.4768"|
|Total Population||0.7745774,500 millionmillion|
|Total Area|| 130000130,000 km² |
50,193 mi² km2
|Climate Descriptors||Moist tropical (Köppen A-type), Moist, temperate|
|Predominent Land Use Descriptors||agricultural- cropland and pasture, mining operations|
|Important Uses of Water||Agriculture or Irrigation, Domestic/Urban Supply, Mining/Extraction support|
- 1 Summary
- 2 Natural, Historic, Economic, Regional, and Political Framework
- 3 Issues and Stakeholders
- 4 Analysis, Synthesis, and Insight
This case study explores the story of oil extraction from the Lago Agrio oil field in the Ecuadorian Amazon. Since 1972, companies – primarily Texaco - have extracted almost two billion barrels of crude oil from Lago Agrio in portion of the Ecuadorian Amazon known as the “Oriente” and in the process have intentionally released or spilled billions of gallons of untreated waste and oil directly into the environment. Since 1992, indigenous citizens of the Ecuadorian Amazon who have been directly affected by the oil contamination have been embroiled in litigation, contending that Chevron, as successor in interest to Texaco, is responsible for the clean up and damages caused by the oil contamination in the Oriente. These litigations are currently being fought in six countries on three different continents. Chevron asserts that it has spent more than $36 million in legal fees and costs in one case alone.
Natural, Historic, Economic, Regional, and Political Framework
The Ecuadorian Amazon (known as “the Oriente”) consists of over 13 million hectares of tropical rainforest, lying at the headwaters of the Amazon River network. The region contains one of the most diverse collections of plant and animal life in the world, including a considerable number of endangered species. It has been called the “richest biotic zone on earth and deserves to rank as a kind of global epicenter of biodiversity.” The Oriente is home to eight different indigenous peoples, with a total population of 100,000 to 25,000, who have lived in the rainforest for thousands of years. The Quichua and Shuar account for the majority, with the rest divided among Huaroni, the Secoya, the Siona, the Shiwiar, the Cofan and the Achuar. These peoples have developed distinct cultures and traditions that are inextricably bound to the rainforest. Their economic and spiritual existence revolves around sustainable management of rainforest resources.
Ecological and Geographical Background
The Ecuadorian Amazon is one of the most biologically diverse rain forests in the world. The eastern half of Ecuador slopes from the Andes mountains and forms part of the Amazon basin; it encompasses over 13 million hectares of rain forest. These ancient rain forests are at the headwaters of the Amazon River system and serve to help control flooding and erosion. It is estimated that the lowland forests in the Oriente contain 9,000 to 12,000 species of plants, many of which are endemic to the area. Over 600 species of birds, 500 species of fish, and 120 species of mammals have been identified.
Oil Company Involvement in Environmental Degradation in Ecuador
Oil companies, primarily Texaco, and the state owned Petroecuador have employed substandard practices and technologies that have led to extensive environmental contamination in the Oriente. As reported in the New York Times in 1991, “Ecuador’s oil practices have won such a bad reputation in South American that Brazil’s oil company, Petrobras, sent a team of scientists here before starting to produce oil to it could avoid mistakes.” Areas in the Oriente are contaminated with oil: thousands of Chevron’s own samples demonstrate oil contamination and estimates are that over 345 million gallons of crude oil were spilled or intentionally dumped in the region. In addition, at least 18.5 billion gallons of toxic wastewater and sludge were dumped into the waterways
The pipeline built to transport the oil has also been plagued by leaks and spills. Poor construction, maintenance and monitoring of transport pipelines caused significant contamination. Through 1989, the Ecuadorian government reported 30 separate spills in the main trans-Ecuadorian pipeline, with a total of almost 17 million gallons of crude oil dumped into the environment. Ruptures in secondary pipelines have released hundreds of thousands more gallons of oil. While some accidental spills are unavoidable, the extent of the spillage in Ecuador is largely attributable to industry negligence, including the lack of spill prevention and response measures. These practices have discharged over 30 billion gallons of crude oil and other waste into the land and waterways of the Oriente since 1972; as compared to the 10.8 million gallons of crude oil spilled in the Exxon Valdez disaster, and the highest estimate of 205.8 million gallons of oil for the BP Horizon oil spill in the Gulf of Mexico.
Reasonable precautions, such as safe disposal of toxic wastes, use of water-based instead of oil- based drilling muds, reinjection of produced waters deep into the ground, proper maintenance and monitoring of the pipelines and production facilities, and spill prevention and response measures could have prevented much of the contamination and its health impacts. Such measures would have added only a small percentage to overall production costs. Interviews with environmental and industry experts, and recent field visits confirm that Petroecuador has not upgraded the equipment or altered the environmentally dangerous practices inherited from Texaco.
The indigenous inhabitants claim that the operations generally, and the improper handling and disposal of toxic wastes in particular, have jeopardized their lives and health. They claim that oil exploitation activities taking place in or near their communities have contaminated the water they use for drinking, cooking and bathing, the soil they cultivate to produce their food, and the air. Residents of affected sectors indicated that their rivers, streams and groundwater were contaminated with crude oil and toxic production wastes, collapsed or leaching waste pits, and oil spills. These are, in most cases, the only water sources available for drinking, cooking and bathing, as well as for the watering of livestock, domestic animals and wildlife.
A 1996 UN report focused on impacts from on illicit waste dumping in Latin America noted that: “The oil industry is seen as the biggest destroyer of Ecuador's 13 million hectares of rainforest inhabited by eight groups of indigenous people (Texaco had 330 wells in Ecuador. It has left the country, but Petroecuador has taken its place). It seems that 1 million hectares of the country's forest have been destroyed and 90 per cent of this destruction is due to the operations of Texaco/Petroecuador. Inevitably, these operations have affected the health of the people living there.” 
In 1993, a study was conducted by a team of doctors, scientists and lawyers from Harvard University, who made two separate trips to the Oriente for the purpose of collecting data on oil contamination levels and associated health effects on people in the Oriente. The study was intended to identify paths of exposure to crude oil by measuring levels of oil-related contaminants in drinking, bathing and fishing, and produced water samples, and examining nearby residents for signs of contamination-related illnesses.  The Harvard study “found that drinking water, and produced water samples contained levels of toxic oil water, bathing and fishing constituents many times greater than the EPA's safety guidelines for drinking water of 5 mcg/L for benzene and 0 ng/L for PAHs.” The Harvard study concluded “This limited study set out to answer two critical questions about oil exposure and potentially related health problems in the Oriente: what is the exposure level to toxic oil constituents, and what are the potential health effects. The study makes the following conclusions: (1) residents of the Oriente are exposed to levels of oil-related contaminants significantly exceeding internationally recognized safety limits and (2) dermatoses and other skin problems apparently related to oil contamination were observed in residents near oil facilities. Such levels of exposure and potential health effects suggest increased risk of more serious health consequences, including cancers and neurological and reproductive problems.”(p 20)
Chevron continues to dispute that contamination from oil is a health concern in the Oriente. On their "Amazon Post" blog, a post entitled “Myth 4: Oil contamination in water is the biggest health threat facing the Oriente” Chevron argues “While the samples contained a high level of microbial contamination, results showed little evidence of contamination from oil. Court-ordered inspections found that 98 percent of surface water and 99 percent of drinking water samples meet international drinking water standards for petroleum hydrocarbons. Those few samples indicating petroleum-related impacts were from areas where Petroecuador’s poor operations had resulted in contamination.” 
Independent peer reviewed health studies confirm elevated cancer rates in the impacted region – with nearly 1,500 deaths attributed to oil contamination exposure. The presence of high levels of toxic compounds and oil-related injuries indicate that the exposed population faces an increased risk of serious and non-reversible health effects such as cancers and neurological and reproductive problems.
Economic Benefits from Oil Production to Indigenous Populations
The indigenous people in the Oriente have realized little benefit from the oil industry. For example, in 1989, a government study found that one town, a primary oil center that accounts for almost half of the national production, lacked public sewers and received electricity and water to only 0.2 percent of the homes.
Governmental, Political and Legal Context
Ecuador is ethnically diverse with extreme wealth and poverty. As Kimerling notes “[a]ccording to one noted anthropologist ‘racism in Ecuador is institutionalized’ and ‘ethnocide’ is a strategy of the national government to conquer Amazonia.” 
In recent years, Ecuador has significantly reduced poverty from 45% in 2004 to 27.3% in 2012.Ecuador has made these accomplishments from oil revenues; the oil sector typically accounts for 50%-60% of the country’s export earnings.
In 2008, Ecuador passed a new Constitution with over 80% approval.  The Constitution is the first in the world to recognize legally enforceable Rights of Nature, or ecosystem rights. Article 71-74 prohibits the extraction of non-renewable resources in protected areas.  Since the passage of the Constitution, however, it has became increasingly evident that the progressive environmental language in the 2008 constitution is not nearly as essential as the poverty alleviation agenda based on oil revenues of President Rafael Correa’s administration. This was exemplified in the Summer of 2013, when the Ecuadorian Government announced that it had no choice but to move ahead with oil exploration in Yasuni, sparking widespread protests from students, environmentalists and indigenous organizations.
In 1995, Texaco and the Government of Ecuador entered into a settlement and release agreement where Texaco agreed to a $40 million remediation program. The remediation project was completed in 1998. The remediation work was inspected and certified by the Ecuadorian government. On September 30, 1998, Ecuador's Minister of Energy and Mines, the President of Petroecuador and the General Manager of Petroproduccion signed the "Final Release of Claims and Delivery of Equipment." This 1998 agreement finalized the Government of Ecuador's approval and certification of Texaco Petroleum's environmental remediation work and stated that Texaco Petroleum fully complied with all obligations established in the remediation agreement signed in 1995.
One of Chevron’s primary defenses in the litigation is that Texaco’s 1995 agreement to remediate with the Ecuadorian government exonerates Chevron, as a successor in interest, from any environmental damages. These arrangements took place under President Sixto Duran Ballen, a dual U.S./Ecuadorian citizen who had been advancing neoliberal reforms begun in the previous decade. Many Ecuadorian observers close to the case believe the Duran Ballen government’s numerous corruption indictments effectively nullified the remediation and note that Texaco was released before remediating a single site.
|1960||The Ecuadorian government invited Texaco to begin exploring for oil in the Lago Agrio region of northeastern Ecuador. No consultation with any of the eight Indigenous peoples was conducted.|
|1964||Texaco begins oil exploration in Lago Agrio|
|1967||A Texaco-Gulf consortium discovered a vast oil field beneath the rainforest.|
|1972||Texaco began pumping oil, ultimately extracting almost 2 billion barrels of crude oil from the Ecauadorian Amazon (known as “the Oriente.) |
|1980||Ecuador's oil production practices won such a bad reputation in South America that Brazil's state oil company, Petrobras, sent a team of scientists to visit before starting to produce oil in the Brazilian Amazon in the late 1980's so it could avoid mistakes.|
|Late 1980s||In the late 1980s, several earthquakes caused extensive damage to the oil pipelines. This environmental damage lead to organizing efforts by indigenous groups and environmental activists. Those living near the oil-drenched forests were emboldened by support they received throughout the country and around the world.|
|1987||Two government studies were conducted to determine the extent of the contamination. The first study found that crude oil was regularly dumped into the rainforest, farmlands and bodies of water and that 80% of the waste pits were poorly construted and constituted a permanent source of contamination. The second study found high levels of oil and grease in all of the 36 samples taken from the rivers and streams near production sites which resulted in serious harm to the aquatic ecosystem. |
|1990||Texaco ceded control and operation of the oil facilities to Petroecuador, which assumed the management of the consortium and has since used the same substandard technologies and practices inherited from Texaco.|
|1991||Texaco rejects calls by environmentalists to set up a $50 million cleanup fund.|
|1992||Texaco sells all of its interests in Ecuador to Petroecuador.|
|1992||Ecuador adopts relevant (though still flawed) environmental regulations for the oil industry.|
|1992||An audit of Texaco’s practices was commissioned jointly by Petroecuador and Texaco in 1992 as part of the process of turning control of the consortium over to Petroecuador. The audit was presumably intended to fix a price on any damages caused by Texaco’s two decades of oil activities. However, the audit was designed and conducted without any input from environmental groups, indigenous federations, or the communities most affected by contamination, raising concern that the entire procedure was intended to minimize the extent of Texaco’s potential liabilities. These concerns were heightened after independent experts from the United States found that a leaked version of the audit criteria completely excluded possible health impacts and failed to list potential toxic contaminants.|
|1994||Field visits by environmental groups, and independent observers confirmed that Petroecuador continued to employ the environmentally dangerous equipment and practices inherited from Texaco, including the discharge of toxic wastes directly into the environment.|
|1994||Ecuadorian Indigenous Representatives File a Class Action in New York.|
|2001||Chevron acquires Texaco|
|2011||After 19 years of litigation – the Ecuador Supreme Court awards Plaintiffs $19 Billion – the second largest environmental judgment in history (BP’s 2010 Gulf of Mexico oil spill is the largest to date.)|
|2011||Chevron filed a racketeering (RICO) lawsuit against the plaintiffs' lawyers and representatives in US federal court, alleging that the plaintiffs' lawyers and representatives have conspired to extort up to $113 billion from Chevron through the Ecuadorian legal proceedings.|
|2012||Chevron placed in the Top 10 in Fortune magazine’s list of companies most admired for social responsibility, and first among its peers in the petroleum industry.” |
|2013||Ecuador’s Highest Court, the National Court of Justice reduces the judgment against Chevron from $19 billion to $9.5 billion.|
|2014||There are now six different legal proceedings in six different countries on three different continents. There may soon be additional litigation before courts in Colombia, Panama and Venezuela.|
|2014||In a nearly 500-page ruling, United States District Judge Lewis A. Kaplan ruled in the RICO lawsuit in favor of Chevron holding that Plaintiffs’ lawyer, Mr. Donziger, and his litigation team engaged in a conspiracy and criminal conduct including fraud and bribery of an Ecuadorian judge. Kaplan’s ruling does not dispute that the existence of oil contamination.|
|2014||Chevron has retained over 500 lawyers from 39 separate law firms in the various litigations. While the cost of this action has not been disclosed, in the RICO action alone, Chevron sought recovery of $32.3 million in legal fees and costs. Chevron asserts that this amount does not reflect all the work performed in connection with the racketeering case. Chevron declined to disclose how much it had spent in all of the litigations related to the oil contamination in Ecuador.|
Issues and Stakeholders
Meeting growing energy demand
NSPD: Ecosystems, Governance, Assets
Stakeholder Types: Sovereign state/national/federal government, Non-legislative governmental agency, Environmental interest, Community or organized citizens
The Government and Petroecuador are very concerned with issues of energy independence and oil production. While the indigenous people living in this region are not concerned with country wide energy issues, they bear the burden of environmental impacts of energy extraction from their lands. International groups have expressed their interests in Ecuador pursuing its growing energy needs in an environmentally and socially responsible way
Specific stakeholders include:
- Ecuadorian Indigenous Peoples
- The Ecuadorian Government/ Petroecuador
- International NGOs
Environmental Impacts of future oil production
The people of the Oriente are concerned with continued environmental damage to lands via oil production. While the government has expressed environmental concerns, Petroecuador continues to operate using antiquated practices and equipment. NGOs oppose further oil extraction in the Ecuadorian Amazon, but if it does continue to do so in an environmentally and socially responsible way.
Specific stakeholders include:
- Ecuadorian Indigenous Peoples
- The Ecuadorian Government/ Petroecuador
- International NGOs
Environmental remediation and restitution
NSPD: Ecosystems, Assets, Values and Norms
Stakeholder Types: Sovereign state/national/federal government, Non-legislative governmental agency, Environmental interest, Industry/Corporate Interest, Community or organized citizens
Damages were incurred by both the environment and the indigenous people through oil spillage and waste disposal in the Oriente.The indigenous population is highly concerned with this issue. The government would prefer that they are not held responsible to provide the funding. Plaintiffs in the ongoing case would like to see Chevron provide this funding. Chevron would prefer to limit liability. International NGOs are concerned that some funding is obtained for remediation and restitution.
Analysis, Synthesis, and Insight
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This ASI discusses some specific elements of the WDF (Stakeholder Identification, Joint Fact Finding, Value Creation) where opportunities were missed, and ignoring these aspects have contributed significantly to the ongoing litigation.
Contributed by: Mark Williams (last edit: 28 May 2014)
- ^ 1.0 1.1 1.2 1.3 1.4 1.5 1.6 1.7 THE CENTER FOR ECONOMIC AND SOCIAL RIGHTS, Rights Violations in the Ecuadorian Amazon The Human Consequences of Oil Development, March 1994, http://cesr.org/downloads/Rights%20Violation%20in%20the%20Ecuadorian%20Amazon%20The%20Human%20Consequences%20of%20Oil%20Development%201.pdf.
- ^ 2.0 2.1 Judith Kimerling, Amazon Crude (National Resource Defense Council, 1991), 31, 33
- ^ 3.0 3.1 “CSR in the Oil & Gas Sector: What We Should Learn from Chevron/Texaco-Ecuador,” @ The Philanthrope, September 30, 2012.
- ^ Chris Jochnick, Ecuador Case Study (Centro de Derechos Econmicos y Sociales (CDES), December 1999), http://www.cesr.org/downloads/Ecuador%20Case%20Study.pdf
- ^ Ksenti, Fatma-Zohra. Adverse effects of the illicit movement and dumping of toxic and dangerous products and wastes on the enjoyment of human rights. Special Rapporteur : addendum : report on the mission to Latin America, UN, 1996.
- ^ “Myth 4: Oil Contamination in Water Is the Biggest Threat Facing the Oriente,” Chevron Ecuador Blog Posts, Chevron Ecaudor Lawsuit Myths, October 22, 2009, http://www.theamazonpost.com/news/myth-4-oil-contamination-in-water-is-the-biggest-health-threat-facing-the-oriente
- ^ “World Bank Ecuador Data,” http://data.worldbank.org/country/ecuador, accessed May 23, 2014.
- ^ Andrew C. Revkin, “Ecuador Constitution Grants Rights to Nature,” New York TIme: Dot Earth, September 29, 2008, http://dotearth.blogs.nytimes.com/2008/09/29/ecuador-constitution-grants-nature-rights/?_php=true&_type=blogs&_r=0.
- ^ Community Environmental Legal Defense Fund, “Rights of Nature: FAQs,” accessed May 23, 2014, http://celdf.org/rights-of-nature-frequently-asked-questions.
- ^ 10.0 10.1 10.2 10.3 10.4 10.5 10.6 Adam Chimienti, Ecuadorians 40+ Year Fights Against Chevron Continues Into 2014 (EcoWatch, December 24, 2013), http://ecowatch.com/2013/12/24/ecuadorians-fight-against-chevron/
- ^ 11.0 11.1 History of Texaco and Chevron in Ecuador (Texaco, n.d.), http://www.texaco.com/sitelets/ecuador/en/history/background.aspx.
- ^ 12.0 12.1 James Brooke, “New Effort Would Test Possible Coexistence of Oil and Rain Forest,” New York Times, February 26, 1991, http://www.nytimes.com/1991/02/26/news/new-effort-would-test-possible-coexistence-of-oil-and-rain-forest.html
- ^ 13.0 13.1 Krauss, “Big Victory for Chevron in Claims In Ecuador,” New York Times, March 4, 2014, http://www.nytimes.com/2014/03/05/business/federal-judge-rules-for-chevron-in-ecuadorean-pollution-case.html.
- ^ Chevron 2011 Corporate Social Responsibility Report (Chevron, 2011), http://www.chevron.com/documents/pdf/corporateresponsibility/Chevron_CR_Report_2011.pdf.
- ^ Michael D. Goldhaber, “Ecuador Update: One Door Shuts, Another Opens, and Chevron Lists Its Law Firms - ALl 39 of Them,” The Am Law Daily, January 24, 2012.
- ^ Nater Raymond, “Chevron Seeks $32 Million in Legal Fees in Ecuador Case,” Reuters, March 19, 2014, http://www.reuters.com/article/2014/03/19/us-chevron-ecuador-idUSBREA2I1PS20140319.
|Area||130,000 km² (50,193 mi²) +|
|Climate||Moist tropical (Köppen A-type) +, Moist + and temperate +|
|Geolocation||-1° 39' 11.3446", -76° 46' 6.4768"Latitude: -1.6531512718|
Longitude: -76.7684657872 +
|Issue||Meeting growing energy demand +, Environmental Impacts of future oil production + and Environmental remediation and restitution +|
|Land Use||agricultural- cropland and pasture + and mining operations +|
|NSPD||Ecosystems +, Governance +, Assets + and Values and Norms +|
|Population||774,500 million +|
|Stakeholder Type||Sovereign state/national/federal government +, Non-legislative governmental agency +, Environmental interest +, Community or organized citizens + and Industry/Corporate Interest +|
|Water Use||Mining/Extraction support +, Agriculture or Irrigation + and Domestic/Urban Supply +|