COLUMN ONE : Villagers Stand Up to Big Oil : From the Amazon to the South Pacific, people are sidestepping their governments to confront U.S. firms. Tough tactics are winning them political leverage and compensation.

The Quichua-speaking villagers around this bustling Amazonian oil town blame Texaco Inc. for the black crude oozing from old storage pits, for their forest’s oil-stained stream beds, even for the lack of game in recent years.

“The company ran off all the animals,” complained Oscar Machoa, one of 50 residents sitting on wooden benches under the metal roof of an old equipment shed--women and babies on one side, men and boys on the other--at a village meeting in nearby San Carlos.

But Machoa and local leaders in other countries around the globe have gone beyond complaining about foreign oil producers in their midst.

From Machoa’s corner of the rain forest, Indian groups are suing Texaco in a U.S. district court, seeking more than $1 billion to clean up the Amazon’s oil fields.

And elsewhere, from Nigeria to East Timor, increasingly sophisticated demands are confronting U.S. energy companies, which have greatly expanded their hunt for new oil overseas as exploration prospects have dimmed at home.

Some local groups accuse the companies of wreaking environmental damage, others of human rights abuses. Many have sought concrete bounties in exchange for welcoming Big Oil--demanding, for instance, a new hospital, school or road.

“It’s important to set a precedent that an indigenous community can demand accountability,” said New York-based environmental activist Judith Kimerling, one of the lawyers who has filed suit against Texaco on behalf of Amazonian Indian federations and other rain-forest groups. Such legal hammers, wielded in U.S. courts, are going to make “every U.S. oil company think long and hard about its international actions,” she warned.

The history of oil exploration in the developing world has been a drama of exploitation, corruption and lush rewards--most of them going to risk-taking, entrepreneurial corporations from the industrialized West.

Beginning in the 1880s, companies were granted concessions giving them virtually sovereign sway over exploration tracts. But since the 1970s, central governments in developing countries have been able to command much-improved terms, often reaping half the profits--and bearing little of the risk--of petroleum production.

Overseas exploration and production spending by the 18 leading U.S. oil companies grew from 28% to more than 61% of their exploration budgets from 1982 to 1992, according to a study by the American Petroleum Institute.

But until recently, only rarely have the local people of a developing nation had much say in the fate of their region’s rich resources.

“There’s a real problem in country after country where the resources are considered state-owned,” said Owen J. Lynch, who teaches at the Johns Hopkins University School of Advanced International Studies in Washington. Central governments make natural-resource agreements without cutting the locals in on the deal, he said. “We’re talking about hundreds of millions of people, and they’re considered squatters on public land.”

So, many local groups are pressing their case directly to U.S. companies, often through environmental and human rights groups based in the industrialized nations. And around the globe, this newfound political sophistication has substantially changed the game:

* In Papua New Guinea, indigenous groups hold what amounts to veto power over foreign energy projects.

* In Myanmar, formerly Burma, the concerns of local groups are squelched by an authoritarian regime, but Western allies have brought their complaints directly into U.S. oil companies’ boardrooms.

* In Russia, American companies as part of oil-production deals have agreed to provide communities with medical supplies and to build low-cost housing for Russian soldiers returning from former East Bloc nations.

“Getting into Kuwait in the 1940s, one of the major (oil companies) was asked to provide a yacht,” said Daniel Yergin, president of Cambridge Energy Research Associates. “Now it’s housing.”

For the oil companies, the hazards of exploration “have shifted from geologic or technical risk to commercial or political risk,” added J. Robinson West, president and CEO of Petroleum Finance Co., based in Washington.

A recent oil workers’ strike in Nigeria underscored the power of an emboldened populace.

The nine-week strike cut production an estimated 29% for resident foreign oil companies, which include Chevron and Mobil. The strikers, who sabotaged some facilities, had called on the companies to halt operations. Their goal: to cut off government revenue as they pressed to install jailed opposition leader Moshood K.O. Abiola as president.

The companies declined, saying that would have amounted to internal political interference. Nigeria’s military head of state now commends “our major partners in the oil industry” for their support during the strike, which failed in September when the junta arrested strike leaders.

Historically, it was the success of the grass-roots campaign aimed at prodding U.S. businesses to pull out of apartheid South Africa that gave hope to efforts around the world to influence corporate behavior.

“It took a while, but eventually most of them left,” said Paul M. Neuhauser, a University of Iowa law professor who represents church groups of the Interfaith Center on Corporate Responsibility, the New York-based organization at the heart of the anti-apartheid campaign in the 1970s and ‘80s.

One target now eyed by the interfaith center is China, where foreign companies have invested more than $5 billion in the oil hunt--but whose Communist regime’s human rights record is criticized worldwide.

And the center already is campaigning to introduce shareholder resolutions at Unocal and Texaco annual meetings, hoping to force management to stop doing business in military-run Myanmar.

According to Sister Valerie Heinonen, director of the center’s militarism program, Myanmar villagers tell church activists that government soldiers are forcibly displacing whole villages and then drafting the locals to work--without pay or even food--to prepare areas in advance of a planned petroleum pipeline.

“And that’s where the horror stories come in,” Heinonen said. “These people are put to work either as laborers in the sense of hacking out a road, or space for a railroad, or to carry equipment or whatever the soldiers need.”

Amoco already has pulled out of Myanmar, although the Chicago-based company maintains that it saw no evidence of slave labor. An Amoco spokesman said pulling up stakes was “purely a business decision driven by geology.”

Los Angeles-based Unocal, which plans to stay in Myanmar, says that pipeline infrastructure work hasn’t even begun.

“We have flown over the pipeline (route) several times, and we can’t find any evidence to support the allegations,” Unocal spokesman Barry Lane said. “We can’t find any work going on.”

Lane and others in the oil industry argue that the presence of U.S. companies actually spurs human rights progress in developing nations. Local people are “better off,” Lane contended, “because of the wages we pay, the working conditions we have, the education, the training and the compelling day-to-day example of respect for human individuals and their rights.”

Unocal and its French partner, Total S.A., plan to train local farmers and others for higher-paying oil field work and eventually may set up a formal school like one Unocal runs in Thailand.

Several U.S. ambassadors to Southeast Asian nations, speaking recently to Southern California business groups, noted that U.S. companies bring their best oil field equipment overseas, transferring that technology and operational knowledge to the developing nations’ oil industries and workers. Japanese companies, by contrast, often bring older technology.

U.S. firms also have more local employees in senior staff ranks, according to the diplomats. “American companies have done demonstrably better at moving Indonesians up,” said Robert L. Barry, U.S. ambassador to oil-rich Indonesia.

But Indonesia is also at the heart of one of oil’s toughest political conflicts.

In 1975, the predominantly Muslim nation conquered the former Portuguese colony of East Timor, a Roman Catholic enclave on an island 300 miles north of Australia. In the years since, up to 200,000 Timorese have been killed in a bloody campaign of subjugation. The United Nations--including the United States--does not recognize Indonesian rights over the area. The dispute is expected to be heard this year or early next by the International Court of Justice at The Hague.

In 1989, Australia and Indonesia divvied up the potentially lucrative offshore oil rights in the waters between East Timor and Australia. U.S. companies, including San Francisco-based Chevron, have since bid for and won exploration rights.

What happens if the World Court overturns the Australian-Indonesian deal?

“It’s too early to assess,” said a spokesman for Chevron, which has not yet sunk a well.

A U.S. group representing the Timorese thinks otherwise. “The Indonesians haven’t any right to sell oil in the water there,” said Charles Scheiner, national coordinator for the New York-based East Timor Action Network. “The East Timor people themselves say they would be perfectly happy to negotiate leases with the Western companies, however.”

A thousand miles to the east, in Papua New Guinea, Chevron has tried to meet local entanglements head on. And with good reason. The indigenous people of the island nation own 90% of the land, and traditional clans aggressively defend their rights, occasionally with ax and spear.

Chevron spent 1988 to 1990 negotiating village to village to forge local agreements for a $1-billion pipeline and oil field project. Heeding environmentalists’ recommendations, the company included a wide range of environmental safeguards--planning, for instance, to haul equipment with helicopters during construction to avoid building a road.

Roads in undeveloped areas often are blamed for bringing destructive settlement, unchecked logging and other ills to the backcountry. But the 10,000 people around remote Lake Kutubu--poor even by Papua New Guinea standards, with per capita incomes averaging $60 a year--had other priorities.

They wanted Chevron’s development to create jobs, with salaries that would pay school fees for their kids and build clinics. And, although some villagers opposed the idea, most--tired of having to walk three days to get to transportation, local government facilities or health care--wanted Chevron to build a road.

They wanted “transportation access to the outside world at times, and also the frills of life--to go buy some beer, or go into town,” said Don Henry, director of the South Pacific program for the World Wildlife Fund.

Even so, Henry’s environmental group counseled villagers against the idea. And he has seen one of his fears realized since the project was finished this year: Small-scale logging already has appeared along the road’s shoulders.

Still, Henry has been impressed by Chevron’s efforts, which include not only the $40-million road but more than $45 million in contributions to other community projects. “We found this situation in Papua New Guinea more encouraging than anything we’ve run into,” Henry said.

Texaco is receiving no such praise for the legacy of its decades of oil production in Ecuador.

Today in the rain forest, petroleum towns such as Lago Agrio, Shushufindi, Sachas and Coca have grown from nothing into small cities where pickup trucks and buses come and go on streets lined with equipment yards, supply stores, bars and brothels. Pipelines stretch along the sides of roads coated with greasy waste from oil wells. From these roads, settlers slash and burn deeper and deeper into the forested hills. A 1.2-million-acre area, once dense rain forest and pristine rivers, is scarred with roads and pocked with oil wells after development by Texaco in the 1970s and 1980s that turned Ecuador into South America’s No. 2 oil exporter.

Critics in Ecuador and the United States say Texaco, the fourth-biggest U.S. oil company, shares the blame for the damage with Petroecuador, the government oil concern that took over operation of the Texaco fields in 1990. (Texaco ceased all operations in Ecuador two years later.)

And those critics have clout. Ecuador boasts the best-organized, if sometimes divided, indigenous federations of any in the developing world. The local groups have strong advocates in the industrial nations--including the Natural Resources Defense Council, Oxfam America and the Rainforest Action Network, all in the United States.

The Ecuadorean government’s own preliminary evaluation of environmental damage runs to $5 billion, according to Luis Carrera, environmental adviser to President Sixto Duran Ballen.

Texaco spokesman J. Michael Trevino is quick to agree with Ecuadorean officials who say Petroecuador did most of the damage. Still, he said, Texaco will pay for part of the cleanup: “We know there is limited and localized damage, and we are prepared to remediate it.”

The company’s latest offer, according to reports in Ecuadorean newspapers: $12 million.

“We don’t think that’s going to do it,” retorted Cristobal Bonifaz, an Ecuadorean-born attorney practicing in Amherst, Mass., who sued Texaco in November, 1993, in a U.S. district court in New York. The lawsuit charges in part that Texaco executives used technology and methods in Ecuador that were below industry standards, all to save money.

Atlantic Richfield Co., meanwhile, has sought to avoid Texaco’s oily black eye.

Under a 1988 contract with Petroecuador, Los Angeles-based Arco has drilled three exploratory wells in a tract of forest crossed by the Villano River. The company hopes to drill more wells in the same area to develop the field.

After the first two well sites were capped, the earth was re-contoured with topsoil saved when the areas were cleared. Native trees grown in Arco nurseries were used in reforesting. Drilling wastes were re-injected into the ground, underneath potable water tables.

Nonetheless, the Rainforest Action Network and other U.S. environmental groups have hounded Arco in a series of public demonstrations--in large part because the company negotiated agreements with individual Ecuadorean communities rather than working with a provincial federation of native communities known as OPIP.

Critics say the company bought the cooperation of local community leaders who knew less about potential damage than OPIP’s leaders. W. Ken Keag, resident manager of Arco’s Ecuador business, and other Arco officials deny it.

Whatever the case, OPIP leaders on a U.S. tour sponsored by Oxfam America met for 12 hours in March with Arco executives in Texas. Since then, more meetings in Ecuador have begun to develop a regional resource planning mechanism.

Ecuador’s Ministry of Energy and Mines has pledged to create a national committee to monitor petroleum activities that, in an apparent first for Latin America, will include Indian and environmental umbrella groups.

For their part, many indigenous leaders have come to agree that there is no alternative to some form of collaboration with the oil companies.

Said Rafael Pandam, vice president of CONAIE, a major indigenous group that is suing Texaco, “We are sure that Ecuador cannot live without petroleum.”

Parrish reported from Los Angeles, Long from Ecuador.

In Search Of . . .

With domestic production down sharply, nine farflung regions of the world are the hottest spots for exploration today by U.S. oil companies. Virtually every venue draws the oil industry into political, social or environmental conflict with increasingly savvy local populations.

Alaska/Yukon

* 20 billion barrels (10 on U.S. side, 10 on Canadian)

* Interested companies: Arco, Exxon, Chevron, Phillips, Occidental

North Sea

* 20 billion barrels

* Interested companies: Chevron, Texaco, Amoco, Arco, Conoco, Exxon, Unocal, Phillips, Mobil

Former Soviet Union

* 120 billion barrels

* Interested companies: Chevron, Amoco, Texaco, Exxon, Unocal, Conoco, Mobil, Occidental

China

* 60 billion barrels

* Interested companies: Chevron, Arco, Texaco, Unocal, Exxon, Mobil, Phillips

Venezuela, Colombia, Ecuador, Trinidad

* 80 billion barrels

* Interested companies: Exxon, Chevron, Arco, Amoco, Texaco, Phillips, Unocal, Mobil, Occidental, Conoco

Sub-Saharan Africa

* 40 billion barrels

* Interested companies: Arco, Texaco, Chevron, Exxon, Phillips, Amoco, Mobil, Unocal, Occidental, Conoco

Egypt, Algeria, Libya, Tunisia

* 50 billion barrels

* Interested companies: Texaco, Amoco, Arco, Exxon, Chevron, Occidental, Phillips, Mobil

Middle East (areas still open to U.S. exploration)

* 120 billion barrels

* Interested companies: Arco, Amoco, Texaco, Exxon, Mobil, Chevron, Occidental, Conoco

Other Asia

* 45 billion barrels

* Interested companies: Chevron, Arco, Unocal, Mobil, Exxon, Amoco, Texaco, Conoco, Phillips, Occidental

Top 10 Oil Producers

In millions of barrels per day. 1993 figures are estimates.

1970 United States: 9.64 Soviet Union: 6.99 Iran: 3.83 Saudi Arabia: 3.80 Venezuela: 3.71 Kuwait: 2.99 Libya: 2.76 Iraq: 1.55 Canada: 1.26 Nigeria: 1.08 *

1993 Saudi Arabia: 8.14 Former Soviet Union: 7.30 United States: 6.83 Iran: 3.64 China: 2.90 Mexico: 2.66 Venezuela: 2.31 Norway: 2.30 United Arab Emirates: 2.20 United Kingdom: 1.92 Source: Oil company data; Arthur Andersen / Cambridge Energy Research Associates