Who will pay for Amazon's 'Chernobyl'?

It's barely eight in the morning and already the dusty oil town of Lago Agrio, on the fringes of the Ecuadorian Amazon, is sweltering. Its name means "sour lake" in Spanish, after the hometown of Texan oil company Texaco – a fitting name for an area of once-pristine rainforest that has been decimated in the pursuit of oil. So severe is the environmental damage here that experts have called it an "Amazon Chernobyl".

But the people of Lago Agrio and its surrounding area have been fighting back. Sixteen years ago, 30,000 Ecuadorians began legal action against the US oil company – now owned by Chevron – they hold responsible. Early this year, from the town's tiny courtroom, a lone judge will deliver a verdict on their class-action case. If the judge rules in favour of the Ecuadorians, Chevron could face damages of $27.3bn (£17bn), making it the biggest environmental lawsuit in history.

This week, while both sides await the verdict, a fly-on-the-wall documentary about the case goes on release in Britain. Called Crude, it is directed by Joe Berlinger, whose movie Metallica: Some Kind of Monster charted the band's travails.

Crude tells a story more complex than even that, and it began when Steve Donziger, a lawyer acting for the Ecuadorians, arrived at the film-maker's office. "The story the lawyer told me was indeed shocking," said Berlinger.

In the words of the film's producers, the claim was "that from the mid-1960s until the early 1990s, Texaco (now Chevron) dumped 18 billion gallons of toxic waste and formation water directly into streams, rivers, and the jungle floor; that nearly 18 millions of crude oil was spilled and leaked from pipelines, that more than 235 billion cubic feet of natural gas was burned into the atmosphere, and that nearly 1,000 unlined toxic waste pits were built throughout the region."

A Chevron spokesperson said: "What is being missed, even by well-intentioned people, is that the responsibility for the lack of potable water, insufficient access to proper health care, and malnutrition now affecting the people of the Oriente lies squarely with the government of Ecuador, which has failed to properly address these serious challenges for decades." The company says there is no increased incidence of cancers in the oil-producing areas, that "poor sanitation" contributes to local health issues, and adds that the film is "long on emotion, short on fact", something Berlinger denies.

Within a few days of Berlinger's trip to Ecuador, he realised that the case was virtually demanding to be made into a film. "I noticed a group of indigenous people sitting by the riverbank, preparing a meal by an open fire using processed tuna fish from a big industrial-sized can that came from another corner of the world. They were eating this canned tuna because the fish that swam in their river, which had fed these proud people for millennia, were dead."

Crude is a head-on culture clash bursting with strong personalities where brash US lawyers on both sides are at loggerheads, and Ecuador's indigenous – incongruous in New York with their traditional dress and warpaint – are carefully coached to fight their case in a foreign system. When Sting and wife Trudie weigh in to add the requisite celebrity factor, Berlinger catches strident New York lawyer on the Ecuadorian side, Steven Donziger, prepping Trudie before her spiel in front of the cameras.

But it's the earnest Pablo Fajardo, a 37-year-old Ecuadorian lawyer representing 30,000 local and indigenous Ecuadorians known as Los Afectados (the affected ones), who emerges as the real star. One of 10 children born to a poor family on the Ecuadorian coast, Fajardo moved to the nearby oil town of Shushufindi near Lago Agrio aged 14. A labourer turned human rights activist turned lawyer, the Chevron battle is his first case.

Fresh-faced and dressed in shorts, white T-shirt and trainers, he welcomes me into his small office in Lago Agrio, where piles of neatly stacked and numbered A4 envelopes fill a floor-to-ceiling shelving unit covering the whole of one wall.

He smiles wryly at the paper mountain: "We now have around 80,000 soil and water samples from the affected areas – more than any other trial in the world. At least 50,000 of those results were produced by Chevron's own scientists or technicians and most reveal illegally high levels of toxic chemicals and crude."

Chevron, which took over Texaco nine years after its operations in Ecuador were taken over by Petroecuador, denies responsibility for the damage. A Chevron spokesperson said: "Regrettably, Crude has only scratched the surface of the Ecuador story – it is long on emotion but short on fact. We recognise that the people of the Oriente face legitimate health concerns. Where we part company with the film-maker is about responsibility. The health issues in the Oriente are not related to Texaco Petroleum's former operations."

In 1998 Texaco were granted release from liability by the Ecuadorian government, having spent $40bn on, "remediation work". This settlement protects Chevron from any future government claims but does not protect it from other third-party claims.

The claimants consider the clean-up work performed by Texaco to be unsatisfactory, and cleaned only a small fraction of the hundreds of abandoned waste pits which Texaco had created, without touching the polluted groundwater, rivers and soil. For each oil well drilled, two to five accompanying waste pits were dug directly into the ground to dump the toxic sludge of drilling muds, waste oil and chemical-laced "produced waters" that come out of the ground when drilling for oil.

While waste pits might be standard practice, leaving them open, unlined and then abandoning them untreated certainly isn't. The clean-up deal struck between a Texaco lawyer and the Ecuadorian government is widely interpreted as an implicit admission that the concession area was unacceptably polluted.

Personal testimonies from locals allege that "remediation" sometimes involved little more than shoving soil over the toxic pits, a measure US consulting lawyer for the plaintiffs, Steven Donziger, has likened to "curing skin cancer with make-up".

Fajardo said: "Imagine a family living next to one of the waste pits Chevron has promised is clean. This family trusts the company and starts growing crops and digging wells for drinking water but in reality virtually nothing has been done. It's a huge problem."

Later that afternoon I'm taken on what Fajardo wryly dubs the "toxi-tour" – a visit to several of the nearby pits around Lago Agrio with Donald Moncayo Jimenez, one of the group leaders for the afectados. Jimenez digs down into one of the waste pits close to the Lago-2 oil well using a long metal pole. After only a metre or so below the surface, the soil changes unequivocally to crude. "This pit is one of those remediated," says Jimenez. It doesn't take a scientist to smell the gassy reek of oil, or see the rainbow slicks of oil floating on the top of the pools of water in a nearby garden. He points to a tube sticking out of another former pit. "These siphons were put into almost all the pits so when they got full from oil waste and rain, the excess would just run out into the forest." This particular siphon empties over one man's land and then drains into a stream. Five minutes downstream we see children bathing in the same waters.

Fajardo hands me a book entitled The Words of the Rainforest, a detailed study into the impact of Texaco's drilling. It contains similar personal testimonies from focus groups conducted with those affected. One man describes how a new road sliced his smallholding in two and an oil well was dug either side. Toxic waste pits were dug metres from people's houses, overflowing on to their crops when it rained. A raft of complaint letters are logged from the local authorities to Texaco as early as 1973, warning the company that produced waters were being discharged untreated directly into the rivers used for bathing and drinking. Farmers report that their animals would fall into the unfenced waste pits and die.

But what of Chevron's other claim that, after nearly 20 years of state oil company Petroecuador running the concession, the damage visible today isn't theirs? "We are not defending Petroecuador. Nobody is saying that Chevron should be accountable for Petroecuador's damage. They must each answer to their own damages and, contrary to what Chevron say, it is easy to separate the two."

Almost all the afectados live within 500m of a leaky pit and many of the chemicals, such as benzene and chromium, seeping out the pits are known carcinogens.

Fajardo shows me a map of the northern Amazon, covered with a rash of red dots demarking oil wells. "San Carlos is an area with a high concentration of oil wells," he said, pointing out an area riddled with dots. "Many of the 30,000 live here and cancer rates are very high."

Shushufindi, where Fajardo himself has lived for more than 20 years, is another town blighted by wells. Spikes in stomach and uterine cancer cases have been recorded, as well as high rates of miscarriages, birth defects and childhood leukaemia. And the closer people live to an oil well, the greater the incidence of problems. "Cancer rates here are at least triple those found elsewhere in Ecuador." Court-appointed experts, says Fajardo, have attributed 1,400 excess cancer deaths to Texaco's oil operations.

Even if the case goes their way, the claimants won't personally receive a single cent, any award instead going on carrying out a proper remediation, on health services, and for installing clean water systems. But, although the lawsuit is due to reach a verdict soon, according to Berlinger, Chevron has promised a "lifetime of litigation" and observers estimate that, with appeals, it could continue for at least another 10 years.