MISSION: Southwest Research and Information Center is a multi-cultural organization working to promote the health of people and communities, protect natural resources, ensure citizen participation, and secure environmental and social justice now and for future generations

Petroleum and Ecuadors Indigenous Peoples...Sustained but Unsustainable Development

By Judith Kimerling, with Chris Shuey

The right of "indigenous people and their communities" to participate in national and international decision making on resource development was recognized by more than 170 governments attending the United Nations Conference on Environment and Development (UNCED) in Rio de Janeiro in 1992. Native peoples were recognized status as a "Major Group" whose "commitment and genuine involvement" would be "critical to the effective implementation" of the conference's "global consensus and political commitment" to worldwide sustainable development.

But to the chagrin of indigenous groups, participating nations refused to recognize their rights to self-determination and ancestral lands. Instead, the conference's two principal documents — the Rio Declaration on Environment and Development and Agenda 21 — affirm state sovereignty over resources within national boundaries and the right of nations to "exploit their own resources pursuant to their own environmental and development policies". For indigenous peoples, the imposition of development activities in their lands, without their consent, violates their fundamental rights, and represents the colonization of their territories by outsiders.

In the decade since Rio, many native communities have found themselves facing unprecedented industrialization while still lacking fundamental legal rights to control, or resist, resource development. At the same time, some transnational corporations (TNCs) have implemented voluntary guidelines and codes of conduct that purport to protect the environment and human rights. In some developing countries, these self-regulating practices are the only mechanisms in place to control or mitigate the adverse environmental and social impacts of resource development.

One area where concern remains about the environmental and human consequences of operations by TNCs is the oil fields of Amazonia. A number of international oil companies have promised to raise standards voluntarily and implement new models of responsible operations to protect the sensitive tropical environments and improve relations with indigenous communities. While there may be some environmental improvement at particular sites, corporate claims of environmental excellence have not been independently verified, and as a general matter, environmental conditions in the region have continued to deteriorate.

A study of one TNC operating in the Amazon Rainforest of eastern Ecuador, Occidental Petroleum, reveals that the company's practices do not consistently match its promises to local communities and the public. Visits to indigenous Quichua communities that are featured in the company's promotional materials show that, from the perspective of the local residents, Occidental's initiatives are characterized by serious political and environmental problems. Native communities remain either locked out of decision-making, or are only superficially engaged, usually on the company's terms. Access to even the most rudimentary information about Occidental's operations is lacking among the affected indigenous communities. Quichuan and other native communities remain legally powerless to stop oil development approved by the Ecuadorian government.

Oil Development in Block 15
The Amazon rainforest is the world's largest remaining humid tropical forest. It contains the greatest biological diversity of any known ecosystem, is a natural carbon sink, and is believed to contain 20 to 25 percent of the world's flowing fresh water. It is generally regarded as an environmentally sensitive region, and is home to hundreds of ethnolinguistic groups of indigenous peoples whose health, well-being and cultural survival are closely linked with environmental quality.

Oil and gas exploration and production (E&P) is an industrial activity that can cause or contribute to environmental damage and human health impairment. E&P operations typically generate large quantities of drilling wastes that contain toxic chemicals and large volumes of salt water, also called "produced water." In addition, petroleum pipelines are prone to leaks and spills if not properly operated and maintained. Releases of any of these materials can damage the fragile ecosystems that people and wildlife depend on for survival.

Occidental faced pressure to improve environmental practices and community relations in Ecuador in the early 1990s, soon after it initiated exploration activities in a 200,000-hectare (500,000-acre) tract called "Block 15." The disclosure of irresponsible practices by Texaco and other oil companies in the region since the mid-1960s had spawned a surge in international concern about oil development in tropical forests, and reinforced grievances held by local residents. Occidental began production in mid-1993. Currently, total reserves are estimated at 300 million to 400 million barrels — a volume equivalent to roughly 15 to 21 days of petroleum consumption in the USA.

Occidental's production and waste-disposal wells and Central Processing Facility (CPF) in Block 15 are located in four Quichua communities: Rio Jivino, Limoncocha, Itaya and Pompeya. The production sites and CPF are connected by a network of unpaved roads. Alongside these roads, buried pipelines, called "flow lines," carry a mixture of oil, natural gas and produced water from the production wells to the CPF. At the 40-hectare (100-acre) CPF, crude oil is separated from gas and produced water, which typically contains high levels of salts, hydrocarbons, heavy metals, and other chemicals.

Occidental officials say about 65,000 barrels (or 2.73 million gallons) of produced water are generated every day and disposed of in three waste-disposal injection wells. However, the volume of wastes injected could not be verified. Similarly, the disposition of other oil-field wastes is unclear. Residents report witnessing discharges of some oil-field wastes into forests and waters.

Legal and Policy Framework for Community Relations
In 1998, Ecuador adopted a new constitution that, for the first time, directs the State to "recognize and guarantee" the rights of indigenous peoples "to be consulted about plans and programs for exploration and exploitation of nonrenewable natural resources that are located in their lands and which could affect them environmentally or culturally; to participate in the benefits that those projects obtain, . . . and to receive compensation for socio-environmental damages that are caused to them." The Constitution also guarantees residents of Block 15 the right "to live in a healthy and ecologically balanced environment that guarantees sustainable development" and to receive information and participate in environmental decision-making.

Despite this, Ecuador has not enacted laws or regulations to implement those rights. Rather, Ecuador has effectively ceded both environmental protection and community relations in Block 15 to Occidental. Occidental's 1999 contract with Ecuador adopts the company's 1992 environmental management plan (EMP) as a legal standard for environmental protection. According to the company, the EMP, which is part of the mandatory environmental impact studies (Estudios de Impactos Ambientales, or EIA) required of all oil companies, is "the document which collates all regulatory, mitigation and standards practices to be employed by the project."

But close examination of the EMP reveals that the plan does not provide for consultation with local residents on petroleum development issues, or even contemplate their participation in activities to protect the environment. It does not describe specific elements of the community assistance programs that Occidental has touted as helping affected communities improve their infrastructure and living conditions while preserving cultural and traditional practices. In addition, there are no measures to evaluate either the effectiveness of the programs, or the impact of Occidental's operations on the local communities.

The EIA contains only limited substantive information on conditions in Block 15. There is no discussion, for instance, of Quichua culture, except for an erroneous statement that, unlike other indigenous peoples, Quichua do not practice subsistence gardening, hunting and fishing. On the contrary, the Quichua cultivate a wide range of subsistence crops, especially manioc and plantain, and regularly hunt, fish and gather in forests, swamps, rivers and lakes of the region.

Expropriation — Occidental's Preferred Method of Land Access and Site Selection
Indigenous peoples throughout Amazonia have repeatedly expressed their desire to have clear title to their lands. A top Occidental official in the U.S. told the author in 1998 that the company agrees with this position. Occidental, he said, recognizes and respects the right of indigenous peoples and communities to say "no" to oil development, and does not work in their lands without their "permission" and "consent". He also said the company actively "supports indigenous land rights" in areas where it operates, including efforts to secure legal land titles from national governments.

But an examination of Occidental's legally binding contract with Ecuador shows that the company does not need permission from the Quichua to work in their communities. Instead, Ecuador is obligated to expropriate lands that are needed for the company's operations. Occidental's practice of securing expropriation of lands used for production facilities was confirmed in an interview with the company's chief attorney in Quito. But residents of Rio Jivino, Limoncocha, Pompeya and Itaya did not learn that their lands had been expropriated until after the author had inquired about the practice. Residents of El Eden also learned that community lands had been expropriated without their knowledge when their efforts to negotiate a rental agreement for exploration sites were rebuffed by Occidental.

In Rio Jivino and Limoncocha, residents thought they had sold land to Occidental. In Pompeya, where Occidental has one production well site, a "dry" exploration well and access roads, residents believed the community still owned the lands. They thought Occidental was renting the production site from the community, and occupying the other well site without permission. In Itaya, where land was expropriated in 1997 for a road, and again in 1998 for a well site and access road, there was considerable confusion among the people during negotiations with Occidental over access and community benefits. However, no one knew that land had been expropriated, and there appeared to be a consensus that Occidental had attempted to buy land, but the community had not consented to sell it.

Occidental's EIA does not explicitly disclose the practice. Instead it contains a vague statement that "occupation" of indigenous lands is "permitted and officially approved by the Ecuadorian State and the indigenous organizations." The EIA acknowledges that considerable portions of the lands in Block 15 are located in "Indigenous Areas" that have been legally adjudicated to indigenous groups. But the document does not disclose who owns the land at the locations where the company works, or considers how the operations will affect land tenure.

Officials from the Ministry of Energy and Mines and Petroecuador were aware of the practice of expropriation. However, officials in Ecuador's new Ministry of the Environment were not aware of the practice until they were asked about it in 1999. The Deputy Secretary of the agency characterized expropriation as a "very serious error," especially when communities are willing to negotiate access agreements with companies. He was surprised to learn that the Constitution does not prohibit expropriation of indigenous lands, and said that a priority of the Ministry is to develop regulations to implement the consultation rights of indigenous peoples living in the oil fields.

Such information is extremely important in light of the fact that in every Quichua community where Occidental has located production facilities, with the exception of Limoncocha, the occupied lands were legally titled to the community. The communities are legally constituted comunas under Ecuadorian law, and titled lands are the collective property of all the inhabitants who comprise the comuna. In addition, Quichua comunas in Block 15 are affiliated with several indigenous organizations, including FCUNAE, the Federation of Comunas Union of Natives of the Ecuadoran Amazon, comprised of 76 Quichuan communities in the lower Napo River region, and CONAIE, the National Confederation of Indigenous Organizations of Ecuador. But even those organizations do not have authority to grant permission to companies to occupy community lands.

At the time the EIA was prepared, Ecuadorian law authorized elected community officials, called dirigentes, to rent land for up to five years, but did not allow them to sell community lands. Important community decisions are traditionally made in assemblies by the men and women of the comuna.

Degradation of Community Relations
Even though Occidental located its CPF away from the main population center of the village of Limoncocha, the company's well platforms, roads, pipelines, and sewage treatment plant discharge site are located in and around areas with homes and where important natural resources exist. The comuna of Rio Jivino has been particularly hard hit by Occidental's siting decisions. The 40 hectares selected for the CPF was the community's most important hunting area. It was also a "reserve" they were protecting for their children. Occidental knew that the site was their hunting area and reserve before it built CPF, because residents had tried to persuade the company to find another location. With promises of jobs, transportation, food, fiestas, and other benefits, Occidental convinced the president of Rio Jivino to sell, and he convinced the other residents. The company paid Rio Jivino 40,000,000 sucres for the 40 hectares, an amount that had "never been seen before" in the community, but is now worth U.S. $1,600. Residents thought they were selling their land, but Occidental had secured expropriation of the land in favor of Petroecuador, so that it could work the site regardless of the wishes of the people.

Many people now believe it was a mistake to sell their land. In the words of a community leader,

The company always goes around offering, and with those things it tricks us. They take hold of dirigentes, and give them transportation, money and food, and then the dirigentes convince the people to approve what the company wants, by telling us that the company va a hacer la maravilla por siempre [will work wonders forever]....Now we have problems....The people are always confused. . . .

Another resident explained the decision to sell by saying that Occidental "compro consciencia" — bought consciousness in the community — "in exchange for alcohol, fiestas, food and rides in company vehicles."

At first, relations between Occidental and Rio Jivino were good. Occidental had built a community center and school with a dining area, and funded courses and community projects. After operations were up and running — and had been showcased in press tours and Occidental's promotional video, The Human Face of Petroleum — the company's attitude toward the community changed. According to residents, Occidental gradually withdrew its assistance, and now most people feel that they have been "botada" — thrown away by the company. Company trucks no longer give people rides when they pass on the roads. Jobs are few and temporary. Lately, the company has refused requests for "collaboration" on community projects, despite a promise to fund two projects proposed by the community every year. Occidental did not keep its promises, people say, and now only a favored few receive any benefits from the development. As a former dirigente said,

At first, relations with the company were good. But now all of the comunas are in disagreement with the company. With small obras [works], it won the friendship of the dirigentes, and convinced the people; se hace conformistas [people become conformists]. Now, it is abandoning the friendship, little by little. People are molestas [upset]. The company has not complied with the agreements. We were like children with candy. Now the company does not help at all, except it gives a little money to the dirigentes. The coordination is lost. Community relations do not exist anymore....Now the company ignores us. Before, it conversed, and had a dialogue with us. If we protest, the company will call the fuerza publica [Ecuadorian military].

Many residents now say that they not only do not share in the benefits of oil production, but also feel that the quality of their lives, environment and natural resources has been diminished by oil development. In the words of a former dirigente of Rio Jivino:

With experience, the resentment is growing stronger. We have new diseases but we do not have medicines. The company does not want to help; there is not much community relations. In environmental matters, we are blind, and there are no jobs for most of us....Before, we lived better, more tranquilo [tranquil]. There was no noise or dust. Now it is not even dark at night. And the animals, where are they?...The majority of people here do not feel that they share in the benefits, and, more and more, we are concerned about our health and because we have less food.

Nothing Sustainable About Oil Development in Amazonia
Sustainable development in indigenous communities is a formidable challenge, but in the case of Block 15, Occidental appears to have simply appropriated the language of sustainability in order to help perpetuate an environmentally risky and unsustainable model of development. Rather than inform and consult residents in meaningful ways, the company has used pressure and economic power to "buy consciousness" among the Quichua. Occidental has gained access to indigenous lands by using state-authorized expropriation without the knowledge or approval of local residents.

In Ecuador, the principles of sustainable development have been incorporated into the highest law of the land, the Constitution. This is a significant step forward. But for the indigenous peoples in Amazonia, the reforms will be empty unless concrete action is taken to implement them. A decade after oil companies first embraced sustainable development, the companies are still firmly in control of operations, including environmental and community relations standards and practices. In many areas, local residents are frustrated and disappointed. As recently described by a dirigente, "[w]e are always in protest, defense."

Three Major Changes Needed for Future Development Ten years after UNCED, oil companies are still firmly in control of operations, including environmental and social standards and practices. Voluntary initiatives have led some companies to share some financial benefits of development with local communities, but they are not implementing projects that are sustainable or sharing decision-making power, information and implementation with affected populations. To address the considerable gap that remains between the promise of sustainable development and the reality of development in the oil fields, three major changes are urgently needed: Oil company operations must be regulated and their environmental and social performance independently verified, with community involvement. Corporate responsibility should be binding, not merely voluntary. The use of the rule of law to promote and impose development, but not to control and remedy the injuries it causes, is not fair, and reflects and reinforces inequities in law and governance. International environmental and social standards must be clear and transparent. The principle of free, prior and informed consent must be applied in the oil fields to protect and promote the rights of indigenous peoples in the development process. Governments must recognize and respect the right of indigenous peoples to be voluntary "partners" with oil companies, and ensure that their consent is obtained before companies initiate work in their lands. Corporations must recognize that indigenous peoples are "rights-holders," not mere stakeholders. The expropriation of indigenous lands for oil development should not be permitted. Forced development and expropriation are clearly at odds with the values of sustainable development, which place people and equity at the center of concerns about development Oil development should not be confused with sustainable development. Oil development can be sustained, but it is not sustainable. The U.S. consumes more than 25 percent of the world's petroleum, 44 percent as gasoline, but has only 5 percent of the world's population. Hence, we, too, are actors in the oil fields, and must play a role in sustainable development by reducing our unsustainable patterns of petroleum consumption.