Lawyers for residents of an Amazonian rain forest filed a lawsuit against Chevron in Canada in attempts to enforce a Chevron Ecuador judgment. Their intention is to help themselves to Chevron’s assets in Canada to satisfy an $18.2 billion award that was slapped on the California company.
A case was filed in Canada, where Chevron is an active operator on land and off the shore of the country’s eastern provinces. It also refines product and cooperates with a host of other companies in producing crude oil from Alberta’s tar sands. Approximately 3% of its worldwide production emanates from Canada. As a result, the plaintiffs and their attorneys could go a long way toward perfecting their questionable Chevron Ecuador judgment, were they able to gain acquiescence from Canadian courts.
Despite attempts to enforce, Chevron isn’t guilty in the slightest of any sort of pollution in the country that constitutes OPEC’s runt. What it did do was acquire Texaco Petroleum in 2001—hardly a reason to have a Chevron Ecuador judgment. Texaco had worked in Ecuador until 1992, nine years before it became even a twinkle in Chevron’s eye. Before it ceased its operations and departed the country, Texaco received certification from Ecuadorian government agencies that it had completed all necessary remediation for its share of environmental impacts from its operations in the country.
- Petroecuador owned 62.5% interest in the consortium of which Texaco was a part.
- Before and during the trial in Ecuador, where earlier attempts to win the case were made, evidence of apparent fraud was uncovered by Chevron, including reports by “independent” environmental consultants likely having been ghostwritten by plaintiffs’ attorneys.
- The case and the related Chevron Ecuador judgment are currently being considered by a three-judge panel under the auspices of the Permanent Court of Arbitration in The Hague. The impetus for that action involves a treaty to which both Ecuador and the United States are signatories.
A half-dozen years ago, before the current case, Occidental Petroleum (NYS: OXY) filed a suit for damages following the country’s cancellation of the company’s operating contract there. Ecuadorian authorities claimed that Oxy violated the contract by failing to gain the country’s approval before transferring its 40% stake in a project to Canada’s Encana Corp. (NYS: ECA) . Like its bigger compatriot, Oxy also maintains that Ecuador violated the U.S.-Ecuador bilateral investment treaty.
The company is solid. Chevron’s shares have fallen by nearly 14%. Chevron now trades at a 7.2 times forward P/E ratio. The effects of any Chevron Ecuador judgment remain to be seen.
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