Chevron Expects to Defeat Ecuador in Amazon Cleanup Litigation

Chevron Corp. said March 26 it expects to defeat Ecuador in litigation over who should pay for any eventual environmental cleanup in the Amazon region.

"Chevron ultimately expects to defeat the unfounded claims at issue in this litigation, whether in the courts of Ecuador or in some other tribunal that will hold Ecuador to account for its flagrant failure to live up to its legal commitments and its disregard for the rule of law," said Kent Robertson, a Chevron spokesman.

Chevron and Ecuador are in a dispute over who should pay the costs to repair environmental damage in areas where Texaco Petroleum Co., which merged with Chevron in 2001, had long operated. Indigenous groups, who say oil drilling by Texaco decades earlier had damaged the land, filed a lawsuit in May 2003 against Chevron.

Lawyers for a group of Ecuadorians suing the second largest U.S. oil company by market value are waiting for an official report scheduled for release next week that could include estimated costs to repair the environmental damage.

The environmental group Amazon Watch said Wednesday the U.S. Securities and Exchange Commission has been urged to impose a "substantial" sanction on Chevron for alleged misrepresentations to shareholders over a potential $10 billion liability resulting from the class-action environmental lawsuit.

"Chevron has been fully transparent and consistent in its position on the Ecuador litigation to our shareholders," said Robertson. "This case has been the subject of shareholder proposals instigated by plaintiffs in each of our last four shareholder proxy statements."

Texaco and Ecuador signed an exploration and drilling agreement in the 1960s and later created a partnership with a state-owned oil company that eventually became Petroecuador.

Texaco and Petroecuador operated the oil fields together until 1991. Texaco exited the nation the following year.

Chevron has said repeatedly the court case it is facing in Ecuador suffers from serious irregularities, as well as a lack of seriousness and impartiality.

"We have also been clear about belief that this litigation is being both funded an advanced by U.S. contingency fee lawyers," said Robertson. "The motives of these trial lawyers are apparent from the fact that they have petitioned Petroecuador not to conduct cleanup operations in the region because it would interfere with their suit against Texaco."