Wednesday
November 26, 2014

For environmental damage

Saturday, March 1, 2014

Citizens could still file claims against Repsol

By Fermín Koop
Herald Staff

Even though Argentina is now forbidden from seeking compensation for any environmental damage inflicted by Spain’s Repsol when it was the majority owner of YPF, that restriction does not apply to ordinary citizens or social and environmental organizations, which could now even target the state-run company more directly after the country reached a compensation agreement with Repsol for the 2012 expropriation.

Legal and environmental experts told the Herald the Spanish company, YPF, the federal government and provincial governments could be held responsible for the environmental damage that took place while the Spanish firm ran YPF.

The Supreme Court now has under review two investigations in which YPF, Repsol and the federal government are all accused of environmental negligence.

“YPF decided to waive the government’s right to claim compensation. It was the wrong move and a bad precedent since the state is acting through a company,” Andrés Nápoli, Executive Director of the Environment and Natural Resources Foundation (FARN), told the Herald. “Nevertheless, any person who has proof of environmental damage can lodge a claim at any court.”

In addition to the US$5-bilion compensation to Repsol for the expropriation of its majority stake in YPF two years ago, YPF also sealed a separate deal with Repsol yesterday to bring to an end any ongoing litigation or further action over the expropriation.

On Thursday, Argentina sealed the settlement agreement with Repsol, which outlined the details of the compensation but also removed the country’s right to seek any sort of payment for environmental damage done by the company.

Both Argentina and Repsol are “obliged to give up its right to all extra-judicial, judicial ... claims and action, now or in the future, against Repsol and/or related persons, in Argentine territory as well as abroad or in the international sphere,” reads the agreement.

Yet Repsol will not be firing its lawyers in Buenos Aires anytime soon.

“As long as there is evidence of damage, there will be new claims issued against the federal government, provincial governments, YPF and Repsol,” Nápoli said. “Environmental damage is not subject to the statute of limitations and has an in-built class action since it affects an indeterminate number of people.”

Enrique Viale, head of the Environmental Lawyers Association, told the Herald there are currently two cases being analyzed by the Supreme Court regarding environmental damage done by Repsol, one filed by him against Repsol, YPF, the federal government and provincial governments.

“Our investigation is now at the Supreme Court but there have been no developments,” Viale told the Herald. “The Constitution establishes in its Article 41 the obligation to compensate environmental damage by recovering the damaged areas or by paying compensation if recovery is not possible.”

The second investigation was filed by the ASSUPA organization against YPF and other oil companies such as Chevron because of environmental damage in Neuquén in the 1990s. The investigation is based on a report of the United Nations which estimated in 1997 that 65 percent of Neuquén’s territory had been affected by oil-drilling.

“The report estimated environmental damages of up to US$900 million dollars. Because of that, the then governor of Neuquén declared an environmental emergency in the province in 1997. It was the first time a province did that,” Fernando Cabrera, a member of Observatorio Petrolero Sur (OPSUR), told the Herald.

The Mosconi report

The government’s acceptance of the clause banning litigation to compensate for any environmental damage appears to directly contradict a claim made by Economy Minister Axel Kicillof when he was speaking in favour of the YPF expropriation in Congress in 2012.

“Repsol will have to pay for the environmental damage,” Kicillof told lawmakers.“We are currently carrying out a survey (of the damage) with the governors.”

In June, 2012 Argentina released the so-called Mosconi Report, named after YPF’s first president Enrique Mosconi, which amounted to a balance of the Spanish company’s stewardship of YPF from the 1990s to 2012.

In the report, Argentina accused Repsol of using YPF as a cash cow for its financial expansion and failing to invest appropriately in the country, which not only led production to tumble but also meant that the Spanish firm failed to “implement an appropriate environmental management plan.”

“Waste was not properly handled, numerous wells were not sealed and cesspools were not cleaned, leading to chemicals entering the water table and people drinking polluted water,” Cabrera said.

The report also details that starting in 2009, YPF had seen “a significant increase in the number of (hydrocarbon) spills, ending 2010 and 2011 with more than 4,500 spills.”

Even though the report harshly criticized Repsol, it cannot be considered an open-and-shut case.

“The report was a tool used by the government to boost criticism over Repsol. It should be rewritten and officials should go to the presumed affected areas to verify the damage,” Nápoli said.

When the report was released, numerous provincial governments such as Santa Cruz, Chubut and Neuquén started broadcasting environmental reports in which the damage caused by Repsol was detailed. Neuquén Energy Minister Guillermo Coco estimated the environmental damage in his province was worth US$1.5 billion, while Santa Cruz said 1,700 out of 5,000 of cesspools in the province had not been properly cleaned.

“Suddenly after the government presented the report, numerous governors unearthed reports which had been hidden beforehand in which the environmental damaged is detailed,” Viale said. “Some estimate Repsol’s damage at US$6 billion but I think it’s a lot more than that.”

@ferminkoop

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