Peru Sues Spanish Oil Giant Repsol for Billions After “Worst Ever” Oil Spill

Peru Sues Spanish Oil Giant Repsol for Billions After “Worst Ever” Oil Spill 1

Peru’s prime minister, Mirtha Vásquez, claims that Repsol “apparently” did not even have a contingency plan in place for an oil spill.

The Peruvian government has sued Spanish oil major Repsol and five other companies for the oil spill that occurred off the coast of Lima four months ago. The lawsuit, seeking $4.5 billion in damages, was filed before the 27th civil court in Lima against Repsol (Spain), Mapfre Global Risks (Spain), Mapfre Peru Insurance and Reinsurance Companies (Peru), La Pampilla Refinery (Peru), Transtotal Maritime Agency (Peru) and Fratelli d’amico Armatori (Italy, owner of the tanker involved), Peru’s consumer protection agency said.

“We have filed this lawsuit in accordance with the rules of the Civil Code, which establishes that anyone who causes damage to others while operating a dangerous asset or conducting dangerous activity, is obliged to pay compensation,” said the agency’s director, Julián Palacín, in a recorded statement.

The Repsol crude oil spill occurred on January 15 at the La Pampilla Refinery, some 20 kilometers south of Lima, and was described by the UN “as the worst ecological disaster in [Peru’s] history.” According to Repsol, the accident occurred during the unloading of the Italian tanker “Mare Dorium”, allegedly due to unusually rough seas caused by the eruption of a volcano near Tonga.

From 7 Gallons to 12,000 Barrels

Shortly after the spill at La Pampilla Peru’s prime minister, Mirtha Vásquez, told journalists that Repsol “apparently” did not even have a contingency plan in place for an oil spill. The company’s initial response was certainly to play down the scale and scope of the disaster, describing the spill as “limited”. It even claimed that no more than seven gallons of oil had escaped into the sea.

That tactic became less and less tenable as environmental groups began appraising the true scale of the damage inflicted. According to government estimates, as many as 12,000 barrels of oil spilled into the sea, causing the death of huge numbers of fish, marine mammals and birds across 140 kilometers of coastline. The spill led to the closure of dozens of beaches, shops, restaurants and tourist services in the summer season, in addition to affecting fishing activity.

The effects on the environment, local communities and the economy have been brutal, Christel Scheske, conservation specialist from the Peruvian Society for Environmental Law, told The Guardian:

“The environmental and social impacts of the Repsol oil spill in the short and long term are devastating, and the company’s response has been weak. The oil spill has affected a highly biodiverse part of the Peruvian coast, including two protected areas which are important not only for Peru’s astounding marine biodiversity, but also for over 1,000 artisanal fishers in the region that depend on them.

Heavy metals from the crude oil will remain in the ecosystem for many years, rendering fish, molluscs and other marine species dangerous for human consumption, and affecting the entire marine food web.”

Repsol’s next strategy, which it has doggedly stuck to since, was to deny any responsibility for the disaster. In January, Tine Van Den Wall Bake, a spokesperson for Repsol, denied the company should accept responsibility for the incident.

“We did not cause this ecological disaster and we cannot say who is responsible,” she told national radio. An internal inquiry conducted by Repsol conveniently absolved the oil major of almost all responsibility, laying most of the blame for the spill on Giacomo Pisani, the captain of the Mare Doricum, reported Spanish daily El Mundo on Monday. But Pisani has already fled the scene, as Peru’s most widely read financial newspaper Gestion reports:

Giacomo Pisani, the Italian captain of the Mare Doricum ship, involved in the Repsol oil spill in the Ventanilla Sea, left Peru on March 9, the day after the court barred him from leaving the country so that he could collaborate with the ongoing investigations.

Now the Public Ministry has asked the International Judicial Cooperation Unit to arrest Giacomo Pisani for the purpose of extradition.

Contrasting Versions

Before his escape Pisani insisted that Repsol’s claim that the spill was the result of unusually squally conditions caused by a volcanic eruption was not true. But given Pisani has since absconded, it is hard to know who to believe.

According to the report in El Mundo, Repsol claims that it quickly carried out a thorough cleaning operation to prevent the oil slick from spreading any further. This it did as Peru’s Pedro Castillo’s embattled government descended deeper and deeper into chaos as it executed one cabinet reshuffle after another. Repsol also says it has already compensated hundreds of fishermen and others affected by the spill, in addition to paying more than $600,000 dollars in government fines.

Repsol has described the lawsuit as unfounded, inadmissible and inconsistent. “It does not address the causes of the spill or the cleaning and remediation work already completed by Repsol, or the channels of care for those affected,” said the oil company in a statement, insisting that it has mobilized “all the means at its disposal to contain, clean and remediate the coastline, help the communities in the area and rescue and care for the affected fauna”.

But according to Peru’s government, that is simply not true. In an interview with the independent Spanish online publication CTXT in late January, Mirtha Vásquez, formerly Peru’s prime minister and now president of the Council of Ministers, blasted Repsol’s refusal to take responsibility for the crisis.

“We have thousands of artisanal fishermen whose livelihood depend on this activity and who will probably not be able to work in it again in the months or years ahead,” Vásquez said. “There is also the question of tourism. The Minister of Tourism calculates that there are already 200 million dollars in losses in that sector. And the company just keeps quiet when we tell them we are calculating the level of economic damages.”

Little Cause for Optimism

This is the first time that Peru’s government has tried to sue a global oil major for environmental damage. The decades-long struggle of indigenous and farmer communities in neighboring Ecuador to receive compensation for Texaco’s dumping of billions of gallons of toxic waste throughout a vast section of the Ecuadorian Amazon hardly provides cause for optimism. In 2018, Ecuador’s top court upheld, by eight votes to zero, a historic 2011 ruling that Chevron, which bought Texaco in the year 2000, must pay out $9.5 billion in compensation, but the company still refuses to pay even though it had accepted jurisdiction in Ecuador’s courts.

In the latest twist of the 25-year legal battle, which has cost Chevron an estimated $2 billion in legal fees, the environmentalist lawyer who represents the Ecuadorian communities, Steven Donziger, was sent to federal prison in October on grounds of criminal contempt, as The Nation reported in January:

On December 9, Donziger was furloughed from Danbury Federal Prison after 45 days, and is serving the rest of his six-month sentence under house arrest at his New York City apartment.

Here, briefly, is some background: In 2013, Donziger and his allies won a victory in Ecuadorian courts that required Chevron to clean up 1,700 square miles of polluted rainforest, an area larger than the state of Rhode Island. Chevron refused to comply, and counterattacked in New York federal court by bringing a new suit under the RICO Act, which was designed to pursue the Mafia. In 2014, Judge Lewis Kaplan—and not a jury—found Donziger and certain allies civilly liable of racketeering, bribery, and fraud. Donziger has never faced a jury during his ordeal. (More details about the oil giant’s legal crusade are available here and here.)

Chevron’s onslaught continued after the RICO trial, when it demanded access to Donziger’s electronics. He declined, arguing that his cell phone and computer records would allow the corporation to snoop on his communications with his Ecuadorian clients. At first, Chevron pursued a civil case to hold Donziger in contempt and force him to produce the electronics. Gibson, Dunn & Crutcher, a large corporate law firm, has been a major Chevron legal representative for years, and it started to prepare the civil case. I got access to documents that show that the Gibson firm billed Chevron more than $3,028,000 between January 2018 and April 2019. About a dozen Gibson Dunn employees worked on the case.

Then, in a move that surprised legal experts, in July 2019 Judge Kaplan changed the charge to “criminal contempt.” Judge Kaplan initially followed standard procedure and asked the US Attorney for the Southern District of New York to prosecute Donziger. The US Attorney declined. Martin Garbus, the veteran human rights lawyer who is part of the Donziger legal team, explained: “It was only a misdemeanor case. US Attorneys understand they should be concentrating on corporate and bank frauds, on heavy drug and violence cases, and on government corruption.”

But Kaplan stunned legal scholars by asking a “private prosecutor,” Rita Glavin, who worked for a private law firm, Seward & Kissel (which later turned out to have business ties to Chevron), to bring a case against Donziger. Donziger argues that Gibson Dunn’s long-standing relationship with Chevron was likely indispensable to putting him in prison.

All for a Misdemeanor

So far, an estimated $776,000 of public funds have been spent to enable Glavin to prosecute Donzinger, since she was ostensibly working on the behalf of the US government (and not for Chevron, of course). According to the Donziger team, the figure will end up being higher, because they suspect that additional Glavin billings have been delayed to minimize the total amount. All for a misdemeanor.

All of this is presumably necessary to discourage other poor countries, or communities within poor countries, from suing Chevron — or any other oil major for that matter — for the environmental devastation they are prone to causing. Unfortunately, we live in a world where it is a lot easier for global corporations to sue governments for future profits foregone as a result of government legislation aimed at protecting the public than it is for governments in poor countries to hold foreign companies to account for the actual damages they cause to the environment or public health.

But there is one key difference between the Ecuadorian communities’ interminable struggle with Chevron and Peru’s potential battle with Repsol: when Chevron acquired Texaco, Texaco had virtually no remaining business interest in Ecuador. That meant that the communities affected by its actions had to pursue the damages in foreign jurisdictions, to virtually no avail. By contrast, Repsol has a lot of operations in Peru, including Peru’s Camisea field, one of the biggest natural gas fields in Latin America, the contracts for which the Pedro Castillo government is already interested in renegotiating.

 

 

 

 

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