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2002 ChevronTexaco Corporate Responsibility Report Environmental IssuesCase Study >Legacy in EcuadorFrom 1964 to 1992, Texaco Petroleum Company (Texpet) was a minoritypartner in an oil exploration and production consortium in an environmentallysensitive rain forest region in Ecuador. For most of that period,Texpet was the operator of the field and associated pipeline, whilePetroEcuador, the state oil company, was the majority partner.Although 95 percent of the total earnings that the consortium producedwent to PetroEcuador and contributed to Ecuador’s economy, questionshave been raised about the possible environmental and health consequencesfor the region and the indigenous people who live there.Consistent with company practice, at the time of Texpet’s departure fromthe consortium, it undertook environmental audits to determine whetherthere were any concerns that needed to be addressed. The company subsequentlyentered into an agreement with PetroEcuador, the Ecuadoriannational government, and representatives of indigenous groups and localmunicipalities to manage and fund a US$40 million remediation program.This included closure and remediation of well sites, soils remediation, andinstallation of produced water treatment and reinjection systems.In addition, the company created a US$1 million fund for socioeconomicprojects by nongovernmental organizations and a second US$1 millionfund for the construction of four schools and adjacent medical clinics andvehicles for transportation.The company received certification and approval from governmentinspectors on a site-by-site basis made through several phases of theproject. In 1998, the government of Ecuador and the local municipalitiesprovided a final certification for the program, releasing the company fromfurther claims or obligations.Notwithstanding these efforts, in 1993 lawyers representing a group ofindigenous Ecuadorian Indians brought suit against Texaco Inc. in theUnited States, charging that the company was responsible for allegedhealth problems and environmental damage caused by the oil-producingactivities. On four separate occasions, U.S. courts dismissed the lawsuitbecause they determined that the United States was not the proper jurisdiction.Ultimately, the plaintiffs’ lawyers accepted these rulings and inMay 2003 filed a suit against ChevronTexaco Corporation in anEcuadorian court. ChevronTexaco Corporation and Texaco Inc. maintainthere has yet to be presented any scientific evidence to substantiate theallegations, and there is no basis for this lawsuit.This case has received widespread publicity over the years. It illustratesthe complex issues associated with oil-producing activities, including theresponsibilities of minority and majority partners, the accountability ofstate oil companies and governments, the differing expectations of variousstakeholders, and the ability of court systems to adjudicate complexaffairs where the issue of jurisdiction is not always clear.BiodiversityBackground: Preserving aCritical Natural ResourceBiodiversity refers to the entirevariety of life on earth. It encompassesgenes, species and ecosystems,and the processes thatsupport them. Biodiversity supportshuman life on the planetand, in addition to its intrinsicvalue, provides essential servicesand products we all depend on,including food, clothing, shelter,fuel and medicines. In recentA Bee Orchid grows near our operationsin Wales. The petals of theyears, there has been growingrecognition that preservation offlower resemble bees trying to getbiodiversity is not only an environmentalissue, but also onethe pollen, thus attracting real bees.with important social and economicimplications. The public has become increasingly concernedabout the loss of biodiversity in key regions of the world and the roleindustry has played in that loss.Energy companies such as ChevronTexaco can affect biodiversity in avariety of ways, ranging from direct or primary impacts such as landclearance, to indirect or secondary impacts, like road building, whichcan invite population migration into remote, environmentally sensitiveareas, as well as introduce nonnative invasive species through movementof equipment and materials.Approach: Integrating Biodiversity Considerations into OperationsChevronTexaco is participating in the Energy & Biodiversity Initiative(EBI), a collaboration started in 2001 among industry and internationalenvironmental conservation organizations working to integratebiodiversity conservation into oil and gas exploration and development.EBI participants include ChevronTexaco, BP, Shell and Statoil,together with Conservation International, Fauna and Flora Interna-© 2003 ChevronTexaco Corporation. All Rights Reserved.50