Petroecuador Responsible for Oil Field Infrastructure

The U.S. trial lawyers behind the environmental lawsuit in Ecuador consistently assert that Chevron, a company that has never operated in Ecuador, is somehow responsible for the current state of Petroecuador’s environmental mismanagement. Moreover, when confronted with the reality of Petroecuador’s reckless performance over the last two decades, the lawyers try to claim that Petroecuador’s pollution is Chevron’s responsibility because (as they put it) Petroecuador “inherited” a “flawed production system” from Texaco Petroleum.

Such claims are patently false.

(1)   It is well documented that Texaco Petroleum, now a fifth tier subsidiary of Chevron, operated in Ecuador as a minority partner with state owned Petroecuador. All consortium decisions were made jointly by Petroecuador, the Government of Ecuador and Texaco Petroleum. In fact, the system that Petroecuador assumed full responsibility for in 1992 was constructed in a manner consistent with applicable Ecuadorian regulations and with industry practices that are still in use in many places in the world today.

(2)   In the last two decades, Petroecuador has spent over a billion dollars to more than double the size number of wells in the concession area. In an effort to increase oil production, Petroecuador has drilled more than 400 wells, which represent a cost of more than $1.2 billion and performed thousands of well workovers (250 at an approximate cost of $170,000 each in 2009). Yet, Petroecuador has spent little on corrosion prevention and maintenance which is critical to prevent oil spills. They also continue to use unlined pits, having constructed at least 270 pits (over 90% of which are located in the former concession area) in the last 3 years.

Montage of Ecuador media headlines showing numerous spills.

In the early 1990’s, after the Government of Ecuador made the decision not to renew the concession agreement, Texaco Petroleum spent $40 million remediating its share of the consortium operations. The Government of Ecuador then signed off on this remediation and granted Texaco a full release of liability from any future claims. Petroecuador has repeatedly acknowledged that it is their responsibility to remediate the rest of the sites in the concession area including “all of the pits.”

Since assuming complete control over Oriente oilfield operations, Petroecuador’s operations have generated over 1.2 billion barrels of crude oil and 260 million cubic feet of natural gas, representing a market value of over $57 billion. While the company has recently funneled more than a billion dollars into drilling new wells to maximize oil profits, they have spent little on environmental remediation and socioeconomic projects in the area. The lack of spending on maintenance and proper safeguards against spills has led to crumbling flowlines and pipelines, which has resulted in a deplorable record of oil spills.

Despite Petroecuador’s ongoing pollution, neither the Amazon Defense Coalition nor Amazon Watch has made Petroecuador a focus of their Oriente clean-up campaign, and they have never pursued any legal action against the state oil company. In fact, when Petroecuador began remediating pits in 2006, the Amazon Defense Coalition demanded that the company stop their long awaited cleanup plans as these efforts were “changing the lawsuit.”

While the U.S. trial lawyers and their partners consistently portray Petroecuador’s ongoing environmental mismanagement as the responsibility of Chevron, it is clearly not. The facts are clear – Texaco Petroleum acted responsibly and cleaned up its share of the consortium years ago, while the Government of Ecuador and Petroecuador have chosen profits over environmental stewardship.