Maxus and the Huaoranis

8 Pages Posted: 21 Oct 2008

See all articles by R. Edward Freeman

R. Edward Freeman

University of Virginia - Darden School of Business

Tara J. Adin

Hofstra University - Department of Management, Entrepreneurship and General Business

Geoff Harris

University of KwaZulu-Natal - Faculty of Commerce & Management - School of Economics

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Abstract

This case focuses on the conflict between industrial growth and environmental protection. Although Conoco contracted with Ecuador's state-run oil corporation to drill for oil in a sector of the Ecuadorian rainforest estimated to have oil reserves in excess of 200 million barrels, the company confronted intense opposition from environmental protection groups, who were aiming to uphold the sector's designation by UNESCO as a world ecological reserve, and from the Huaoranis, who were indigenous to the area. This case explores the political, social, economic, cultural, legal, and environmental pressures that influenced Conoco's decision-making process.

Excerpt

UVA-E-0095

MAXUS AND THE HUAORANIS

Conoco

In 1986, Du Pont subsidiary, Conoco, contracted with Petróecuador, Ecuador's state-run oil corporation, to search for oil in a sector of the Ecuadorean rain forest. The proposed search area, known as Block 16, lay within the boundaries of the Yasuni National Park, an area which UNESCO designated as a world ecological reserve. Experts estimate that Block 16 has oil reserves in excess of 200 million barrels. Leading a consortium of American oil interests, Conoco planned to invest more than $ 500 million extracting these reserves.

Because of the drilling site's fragile ecosystem, Conoco's proposal faced intense opposition from environmental protection groups. Pointing to past practices of oil companies in Ecuador, these groups claimed that Conoco's project would irreparably damage the precious environmental resources of the Ecuadorean rain forest. To further complicate matters for Conoco, part of Block 16 was situated in the ancestral territory of the Huaorani tribe—a group of indigenous hunter-gatherers who drew their life from the land. Now, in addition to opposition from environmental groups, the company had to contend with the Huaoranis themselves.

Nevertheless, Conoco appeared committed to the project. In response to criticisms put forth by the National Resource Defense Council, Conoco took measures to make its drilling operation the most environmentally sensitive of its kind. Previously, little thought was given to the environmental impact of oil production. In its proposal, Conoco planned to implement measures that would reduce deforestation and limit pollution. Conoco also paid attention to the concerns of the indigenous people. During the preliminary stages of development, the company helped check spread of disease among the Huaoranis by inoculation.

. . .

Keywords: industrial growth environmental protection ethical environment cultural conflict international business political social legal economic

Suggested Citation

Freeman, R. Edward and Radin, Tara J. and Harris, Geoff, Maxus and the Huaoranis. Darden Case No. UVA-E-0095, Available at SSRN: https://ssrn.com/abstract=908137 or http://dx.doi.org/10.2139/ssrn.908137

R. Edward Freeman (Contact Author)

University of Virginia - Darden School of Business ( email )

P.O. Box 6550
Charlottesville, VA 22906-6550
United States
804-924-0935 (Phone)
804-924-6378 (Fax)

HOME PAGE: http://www.darden.virginia.edu/faculty/freeman.htm

Tara J. Radin

Hofstra University - Department of Management, Entrepreneurship and General Business ( email )

Hempstead, NY 11549-1000
United States
(516) 463-4795 (Phone)

Geoff Harris

University of KwaZulu-Natal - Faculty of Commerce & Management - School of Economics ( email )

Durban 4000
South Africa
(27 31) 260 1186 (Phone)
(27 31) 260 2811 (Fax)

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