Chevron in Ecuador

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Article on March 2004 Investor Delegation to Ecuador

ChevronTexaco on the Defensive

By David R. Baker, San Francisco Chronicle
3 March 2004

Suit in Ecuador Alleges Drilling by Texaco Caused Environmental Damage in Amazon

When Chevron merged with Texaco in 2001, it inherited a simmering environmental dispute in Ecuador that could cost the company billions.

Texaco had dumped crude oil and water into open pits in a corner of the Amazon where the company drilled between 1964 and 1992.

Now the combined company, based in San Ramon, is fighting a suit in Ecuador charging that Texaco left pollution that has poisoned the region's drinking water and sickened residents.

Today, representatives of activist ChevronTexaco shareholders will fly to Ecuador to tour the region at the heart of the dispute, near Lago Agrio. They will meet with residents and monitor pollution tests central to the court case.

ChevronTexaco representatives will also be on hand to meet with the shareholders and spell out their side of the case.

"We'll talk with anybody," said Russell Yarrow, external relations manager for ChevronTexaco. "Essentially, we'd like them to be able to separate propaganda from proof." The suit could cost ChevronTexaco $6 billion, which the plaintiffs argue is needed to clean up the area.

"There's a huge gap in the information from what the indigenous people say and what the company says, so this delegation will get an opportunity to meet with both sides," said Leila Salazar with Amazon Watch.

The San Francisco nonprofit group, which wants ChevronTexaco to clean up more of the area, organized the trip. Participants, however, have to pay their own way.

While there, they will also visit another part of the Amazon where Burlington Resources of Houston wants to drill for oil, sparking protests from residents.

ChevronTexaco argues that tests at its former sites have so far failed to turn up harmful pollution levels. The company also insists that Ecuador's state oil company, which still pumps crude in the region, agreed years ago to clean up most of the sites and is now trying to renege.

The small delegation includes one representative of California Controller Steve Westly. Two other people on the trip work with investors who use their cash to push for ethical changes in the companies whose shares they hold.

Leslie Lowe directs the energy and environment program at the Interfaith Center on Corporate Responsibility, which represents the investing arms of many Catholic and Protestant institutions.

Some of the center's members have filed a ChevronTexaco shareholder resolution seeking a report on the company's activities in Ecuador. Shareholders rejected a similar resolution last year.

The company's environmental record, she said, will affect its future ability to sign oil production agreements elsewhere. That makes the company's behavior in Ecuador relevant to long-term investors, prompting her to sign up for the trip.
"Is the company doing the socially responsible thing that will allow it to operate in these countries?" Lowe asked.

As part of the tour, Lowe and her companions will observe an inspection of one of the sites involved in the suit. Under the supervision of an Ecuadoran judge, ChevronTexaco and its opponents are checking for contamination at 122 locations. Each team runs its own analysis of soil and water samples, submitting results to the court.

So far, the two sides have reported very different results. ChevronTexaco, for example, says it hasn't found cancer-causing benzene in its samples and adds that the plaintiffs haven't either.

Steven Donziger, an attorney representing Ecuadoran residents in the suit, says the plaintiffs' tests have turned up benzene and other potentially harmful chemicals.