Ecuador Says Could Help Settle Chevron Suit

QUITO - Ecuador is willing to mediate a settlement between Chevron Corp and 30,000 Amazon jungle dwellers suing the oil company for up to $16 billion in environmental damages, the country's top attorney said on Wednesday.

Peasants and Indians are suing the U.S. company in an Ecuadorean court over charges its Texaco unit polluted the jungle and damaged their health by dumping 18 billion gallons of oil-laden water from 1972 to 1992.

The case, which Chevron calls a "judicial farce" plagued by government interference, has dragged on for more than a decade, but the plaintiffs expect a ruling by early next year.

Ecuador Inspector General Diego Garcia told Reuters his government could help both parties reach an out-of-court settlement in a case that has spotted the image of the second-largest U.S. petroleum producer.

"We are willing to facilitate an agreement," Garcia said from his Quito office. "We are not part of the process ... the message is that we will only step in as a facilitator if both sides want us to."

Both parties have not ruled out a settlement, but experts say a deal is unlikely.

The plaintiffs accuse Chevron of pressuring the Ecuadorean government into the case by asking Washington not to renew key trade preference tariffs on the Andean country's products.

"Chevron is playing dirty politics in Washington to drag the (Ecuadorean) government into the case," said the plaintiffs' attorney, Pablo Fajardo. "However, we are not ruling out a settlement, but that will depend more on Chevron that on us."

Texaco, bought by Chevron in 2001, denies its operations affected the health of Amazon communities. The company has argued it was released from any liability because it paid $40 million for an environmental cleanup in the 1990s and blames state oil company Petroecuador for much of the pollution.

"We are open to any conversation, but the government needs to recognize that they have unfulfilled obligations," said Kent Robertson, a Chevron spokesman in California. "The state also needs to stop interfering in the trail."

President Rafael Correa, a leftist who often scorns foreign oil companies and accuses them of cheating his poor nation out of billions of dollar in revenue, has said Chevron has done irreversible damage to the Amazon's pristine jungle.

Fajardo denies any government meddling in the case.

Reporting by Alonso Soto; editing by Braden Reddall
© 2008 Reuters