An Argentine judge embargoed Argentine-based assets belonging to the US-based oil company Chevron yesterday in light of an unpaid settlement to Ecuadorian villagers for environmental contamination. Enrique Bruchou, the plaintiffs’ attorney in Argentina, estimates that Chevron’s assets in the country total about US$2b, though the ruling accounts for up to US$19b, the settlement total.
“The freeze order applies to the entire US$19b amount of the Ecuador judgment, meaning that Chevron will effectively be barred from investing further in Argentina unless it wants to risk seizure of those assets as well,” read a statement from the plaintiffs.
The move continues a nearly 20-year long legal battle after indigenous tribe members and farmers claimed that the oil company Texaco, Inc. polluted their Amazonian watershed for 30 years, causing environmental damage and medical complications among local community members. Chevron Corporation acquired Texaco, Inc. in 2001. Ecuadorian courts found Chevron liable and doled out a US$19b settlement, which the oil giant has refused to pay, claiming bribery and fraud on the courts’ part. “We do not believe that the Ecuadorian judgment is enforceable in any court that observes the rule of law,” the company stated. A fraud suit is set to begin in the United States in October of 2013.
Because Chevron has no significant assets in Ecuador itself, the plaintiffs have attempted to leverage asset freezes in other countries to procure settlement payment. Argentine judge Adrian Elcuj Miranda’s ruling includes 100% of Chevron’s capital in Argentina, 100% of dividends, all stake in Oleoductos del Valle SA, a key pipeline operation company, 40% of oil sales to Argentine refineries, and 40% of cash in Argentine banks. The ruling will stand until the entire settlement owed to the Ecuadorian plaintiffs is paid.
“We consider this to be an exemplary ruling,” Bruchou said. “We are letting the world know that foreign investment is welcome in Latin America, but that investors must adhere to the same environmental standards that apply in their own countries”.
Chevron claimed via an emailed statement that it has not been notified of any Argentine rulings. It claims that any such decision would be invalid because “all operations in Argentina are conducted by subsidiaries that have nothing to do with the plaintiffs’ fraud in Ecuador…. Plaintiffs’ lawyers have no legal right to embargo subsidiary assets in Argentina and should not be allowed to disrupt Argentina’s pursuit of its important energy resources”.
The company’s net production in the country hit 26,000 barrels of crude oil per day and four million cubic feet of natural gas per day in 2011, according to the company website, making it Argentina’s fourth-largest oil producer. In September, YPF SA, the recently nationalized Argentine oil company, signed a memorandum of understanding with Chevron for a joint exploration project of Argentine unconventional gas and oil resources. Chevron also owns 14% of Oleoductos del Valle SA, which transports crude oil from Western Argentina to the Buenos Aires area via pipeline. An informational technology centre in Buenos Aires supports Chevron’s North American offices.
Last spring, the plaintiffs’ attorneys filed similar suits in Brazil and Canada and plan to extend their requests to Asia, Oceania, and Europe.
An Argentine judge gets involved in a dispute between an American oil company and Ecuadorian villagers. Meanwhile, a Ghanian court impounds an Argentine naval ship for debts to bond holders in the United States. What next? I guess Argentines should at least be grateful they’re not part of the Eurozone.