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Ecuador Government Released Company from All Obligations Related to Oil Operations in 1998

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LAGO AGRIO, Ecuador, Oct. 21, 2003 -- ChevronTexaco today made its official response to a lawsuit filed by residents of the Oriente region of Ecuador. The company outlined a series of legal arguments before a judge in the Superior Court of Nueva Loja and explained why the court should dismiss the case. Plaintiffs are suing ChevronTexaco for alleged damages from oil producing operations conducted by Texaco Petroleum Company (TexPet) between 1972 and 1990 in the Oriente region.

"The plaintiffs have failed to present any credible, substantiated evidence to support their claims against ChevronTexaco," said Ricardo Reis Viega, vice president general counsel, Latin America Products for ChevronTexaco. "Moreover, when Texaco Petroleum completed a remediation program in 1998, the government of Ecuador and its environmental agencies unconditionally released the company from all liabilities and obligations related to the oil operations."

Attorneys for ChevronTexaco also noted that the Ecuadorian government and the Energy Ministry were not only well informed of exploration activities, but controlled the entire oil exploration operation in the Oriente region. During the primary period of production activity, PetroEcuador, the state oil company had the majority interest and the majority of benefits from all operations.
In 1990, PetroEcuador assumed full control of the production activities, and in 1992, it took 100 percent ownership of the operations. Today, PetroEcuador continues to be the sole operator of the producing fields in the Oriente region.

After Texaco Petroleum ceased operations in Ecuador, two independent environmental audits were conducted. ChevronTexaco's legal response notes that, "both audits agreed that the operations of the PetroEcuador-Texaco consortium had had a minimal general impact on the environment in the concession area."

At the time that Texaco Petroleum was involved in the consortium, the operations contributed more than $23 billion to the Ecuadorian economy, and 95 percent of earnings generated by operations remained in the country.

"Additionally, the laws cited by the plaintiffs, that were only enacted in 1999, cannot be applied retroactively to oil operations that were terminated in 1992. Furthermore, the statute of limitations has expired on all of the plaintiffs claims. We hope the judge carefully assesses all the arguments we presented and dismisses this lawsuit," concluded Viega.

ChevronTexaco's response to the plaintiffs' lawsuit included several legal arguments why this case should not proceed, including:

• Allegations made against the company have not been supported with any credible, substantiated scientific evidence.
• In 1998, following a $40 million remediation program, Texaco Petroleum Company, Texaco Inc. and all other related companies were released by the Government of Ecuador and four municipalities located near consortium operations, from any legal liabilities for the operations. Therefore ChevronTexaco does not believe the court can hold the company responsible for any claims given the government's full release granted five years ago.
• Since the Government released the company from any future liabilities or obligations, any claims should be made against the government and not the company.
• All operations complied with Ecuadorian laws and regulations as well as standard industry technical practices of the time.
• Under the terms of our Joint Operating Agreement the government is responsible for third party claims. ChevronTexaco can not be held responsible for the actions of a third party.
• Laws referenced in the suit did not exist at the time of the operations and are not applicable. Moreover, the statute of limitations has expired.

It is important to note that the US lawyers stand to gain significantly more financial benefit than the individuals they purport to represent. Under the conditions of the lawsuit filed by the plaintiffs' attorneys, the people of the rainforest would receive no money in the event of a successful verdict. The Amazon Defense Front, an NGO claiming to represent the indigenous population, and the plaintiffs' attorneys would receive up to 10 percent of the value of the environmental remediation they seek.

Following the reading of the ChevronTexaco response, plaintiffs will provide a rebuttal. Next, evidence will be called for and reviewed by the courts.

Read the Spanish version of this press release and other background information on the Ecuador site.  

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