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Friday, April 3, 2009

Lago Agrio oil field

The Lago Agrio oil field is an oil-rich area in the Ecuadorian province of Sucumbíos, discovered in the 1960s. The Lago Agrio field is known internationally for the serious ecological problems that oil development has created there, including water pollution, soil contamination, deforestation and cultural upheaval. Since 1993, lawyers representing local residents have sought to force former well operator Texaco and its parent company Chevron Corporation to clean the area and to provide for the care of those allegedly affected.


In 1964, Texaco Petroleum Company (TexPet) began exploring for oil in northeast Ecuador. The following year it started operating a consortium owned equally by itself and Gulf Oil, to develop a tract around present-day Nueva Loja. The consortium struck a gusher in 1967 and began full-scale production in 1972. The government, through its national oil company CEPE, now Petroecuador, obtained a 25 percent interest in the consortium in 1974.

Over a period of 20 years, the Lago Agrio field produced 1.7 billion barrels of oil with a profit of $25 billion. According to Chevron, 95 percent of the profit from the consortium went to the government. Gulf sold its interest to CEPE in 1977, and TexPet transferred management of the consortium to Petroecuador in 1990. TexPet's concession in expired in 1993, leaving Petroecuador as the sole owner.



TexPet directed produced water from its wells into open pits, as was a common industry practice at the time. According to environmental activists, the produced water was heavy in cancer-causing polycyclic aromatic hydrocarbons (PAHs) and is responsible for present-day contamination of the regional water supply. They allege that there has been a 150% increase in cancer cases in the community and region. Chevron and its supporters maintain that no causal link between the produced water and cancer has been shown.

Remediation efforts

In 1995, amid litigation, Texaco agreed to clean a number of waste pits in proportion to its interest in the consortium, at a cost of $40 million. In exchange, the government released Texaco from further liability. Chevron has used this agreement as its primary defense against the ongoing legal claims.


Lawyers for the indigenous residents of the Lago Agrio field sued Texaco in 1993. The lawsuit accused TexPet of discharging produced water into the same water that was used by the locals for fishing, bathing, and drinking. This case was dismissed for improper venue, and litigation has continued in Ecuador. In 2008, a court-appointed expert issued report accusing Texaco employees of not only widespread pollution, but deforestation and cultural destruction as well. The report estimated the damages by TexPet between $8 billion and $16 billion dollars, which the expert later increased by $11 billion.

One plaintiffs' lawyer, Cristobal Bonifaz, was dismissed from the litigation in 2006 . He went on to file a case against Chevron in 2007 on behalf of new clients who claimed that pollution had given them cancer. The court found that three of the plaintiffs did not have cancer. After dismissing their claims (leaving two claims active), the court imposed a $45,000 fine against Bonifaz for making frivolous claims.

Chevron claims that the company is being unfairly targeted as a deep pocket. It maintains that responsibility for damage and cleanup now lies with Petroecuador and the government, and contends that much of the present damage comes from Petroecuador's activities since 1990, including spills from a pipeline system built by the consortium that Petroecuador has not maintained.

Attorney Pablo Fajardo, who represents the plaintiffs, and activist Luis Yanza received the Goldman Environmental Prize for their work in this case. The prize is considered the most prestigious award for environmental protection in the world.

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