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35. When the consortium began its exploration activities, TexPet and Gulf agreed
that TexPet would serve as the operator on behalf of both companies. As operator, and per the
terms ofthe 1965 Napo Joint Operating Agreement that governed the internal workings of the
consortium, TexPet was "in direct charge of carrying out the [p ]arties' work obligations and
performing other duties" with their prior consent and approval. Each party was obligated to
provide operating expenses and investment funds according to its ownership interest in the
consortium. TexPet was required to render its services as operator at cost and, in consideration
therefor, was to be indemnified and held harmless by the parties for any claims brought by third
parties arising out of or related to its performance as operator.
36. Once Petroecuador entered the consortium and after it became the majority
owner, TexPet continued to serve as operator. As majority owner, however, Petroecuador
contributed 62.5% of the consortium's investments and operating costs and approved all annual
work programs and budgets. Petroecuador retained oversight ofTexPet's activities as operator
beyond the annual budgeting cycles by approving projects as they were implemented and
answering monthly "cash calls" with the funds necessary for each month's operating expenses.
37. TexPet continued in the role of operator until 1990 when Petroecuador assumed
operations. In 1992 when the concession contract expired, Petroecuador took over 100%
ownership of the former consortium fields and facilities. TexPet has not operated any oilfields in
Ecuador since 1990, and has had no ownership interest in any oilfield operations in Ecuador
since [992. From 1992 to the present, Petroecuador has been the sole owner and operator of the
former concession area.
38. Before its termination, the consortium's activities generated over US$23 billion.
The Republic of Ecuador retained 97.3% of this amount, however, through an array of income
taxes, royalties, contributions for domestic consumption, and gross profit on Petroecuador's
share. The money generated by the consortium represented more than 50% of Ecuador's gross
national product during that period.
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