Perenco Response to Articles Regarding Local Communities Protests Against Alleged Environmental

Perenco response to articles regarding local communities’ protests against alleged environmental damage of Perenco’s operations in Orellana, Ecuador

18 July 2006

Perenco Ecuador sent the following statement to the Business & Human Rights Resource Centre in response to the following press articles:

- “Oxy Gone, Protesters Target another Oil Company in Ecuador”, 5 July 2006, Upside Down World

- “Lucha en Orellana”, 8 de julio 2006, La Jornada (México)

- “Indignación en Orellana”, 4 de julio 2006, El Comercio (Ecuador)

Thank you for giving us the opportunity to set the record straight.

Perenco applies state of the art technologies and the highest health, safety and environmental standards to all of its activities and operations on a worldwide basis in order, not only to be fully compliant with local rules and regulations, but mostly to respect the environment and the communities living nearby the areas in which the Company operates. Perenco is also actively involved in promoting education and providing medical assistance, as well as developing and funding initiatives where the members of the communities play an active role and become part of the solution to basic problems ranging from transportation to power generation.

The allegations about damages to the environment caused by Perenco Ecuador, in the area surrounding the Punino 1 well located in the Coca-Payamino field, are false.

The Punino 1 well was drilled in the early 90's by Petroproduccion, a State owned company. Petroproduccion also built the corresponding access road and well platform. The Punino 1 well turned out to be a dry hole and in 1995, the then operator of the field, requested approval from the authorities to use such well for water injection purposes.

The necessary approvals were obtained and soon thereafter a water injection pipeline from the Coca station to the Punino 1 well was built along the access road. It is worth to mention that at the time there were no inhabitants in the area. The communities that currently inhabit the area moved several years after the water injection pipeline was built.

The water injection pipeline currently meets all safety, environmental and health guidelines and is fully compliant with Ecuadorian rules and regulations. Nonetheless, in order to avoid any incidents Perenco Ecuador, per the request of the communities, started works to bury certain portions of the pipeline. However, the works came to a halt because the same communities that requested the line to be buried in the first place inexplicably began to oppose the performance of such works and started claiming indemnification for alleged damages to their alleged properties.

We must point out that the DINAPA, a State environmental agency, was consulted on the matter and concluded the following in official letter No. 748-DINAPA-CSA 0607040 dated 23 May 2006: "No indemnification is due as all the inhabitants moved to the area after the water injection pipeline had been built and the Company fulfilled all the legal requirements prior to the construction of the same".

In order to restart the works the Company made several attempts to meet with representatives of the communities to no avail.

On June 19, certain members of the communities trespassed the Coca station and illegally forced the shutdown of certain wells. It is relevant to note that the Orellana region has been under curfew or State of Emergency for some time before this incident. In view of the illegal occupation of the Coca station, the Army decided to intervene and use public force and took over the Coca facilities arresting Mr Jimenez, one of the protesters, in the process.

Several protests ensued further to the arrest of Mr Jimenez, which events were covered by the press.

For the reasons stated above in our view the articles "Lucha en Orellana" from La Jornada (Mexico) dated 8 July 2006, "Indignacion en Orellana" from El Comercio (Ecuador) dated 4 July 2006 and "Oxy gone, protesters target another oil company in Ecuador" from Upside Down World (USA) dated 5 July 2006 do not present a fair and equitable account of the situation.

The situation is now coming back to normal and we hope to restart the works shortly once safety conditions allow.

Thank you again for giving us the opportunity to present our views on the matter.

PERENCO ECUADOR LIMITED