Brazil prosecutors seek $10.7B from Chevron, Transocean

By Peter Millard and Rodrigo Orihuela

Chevron Corp. and Transocean Ltd. should halt operations in Brazil and pay $10.7 billion in damages after an oil spill last month, prosecutors urged a federal court.

“Chevron and Transocean weren’t capable of controlling the damages from a spill of 3,000 barrels of oil, which proves a lack of environmental planning and management,” the federal prosecutors’ office in Campos, Rio de Janeiro state, said today in a statement on the Federal Public Ministry’s website. The prosecutors didn’t say in which court the suit was filed.

Chevron, the second-largest U.S. crude producer after Exxon Mobil Corp., is being audited by Brazil’s petroleum regulator for the oil leak at the Frade project off the coast of Rio de Janeiro last month. Brazil has tightened safety conditions at crude projects following the spill at BP Plc’s Macondo well in the Gulf of Mexico last year.

Brazilian prosecutors said in today’s statement they are asking a court to immediately suspend Chevron and Transocean’s operations in the country and order a “definitive halt” after assessing the case. A court must rule on the request and the damages.

Transocean, the operator of the rig at Chevron’s Frade project, “continues to cooperate with the authorities,” Guy Cantwell, a spokesman, said in a telephone interview from Houston. “We haven’t seen anything in writing,” he said.

Chevron said in an e-mailed statement it hasn’t been formally notified of any legal action and that it “responded responsibly to the incident at its Frade Field and has dealt transparently with all Brazilian authorities.”

Brazil’s oil regulator, known as ANP, prohibited Chevron from drilling any new wells for at least three months while it probes the spill. The company provided partial video clips of the leak, didn’t report the presence of hydrogen sulfide in a well and didn’t meet requirements in a plan to cement and abandon the well that caused the leak, ANP Director Magda Chambriard said Dec. 1.

The federal environmental agency, known as IBAMA, fined Chevron 50 million reais last month. Rio de Janeiro state will seek 150 million reais for environmental damage from the spill, Carlos Minc, Rio’s environment secretary, said Dec. 6.
Chevron fell 2.9 percent to $100.53 at the close in New York. Transocean declined 3.9 percent to $40.19.

26 Comments

  1. ntangle

    Being barred plus $11B ? For a 3000 bbl spill? That’s ~ $3.5MM/bbl. Sounds like extortion, not justice. Or a way to give their national oil co (PetroBras) the advantage. Talk about a conflict of interest.

    #1
  2. richard

    This is how the world works. Countries will hold oil companies responsible for their recklessness. The threat to take their business elsewhere when regulations in GoM were tightened is hollow. They have nowhere to hide, Gabon maybe.

    #2
  3. Dave

    I worked in Brasil for several years until recently. I know that there is a mentality emerging that the door has been thrown open too wide for the IOC’s, in the past.

    I agree that this fine is way out of proportion to the offense. Could be the ANP is just sending a strong message to the IOC’s to watch their step. Could also be the door slamming. Time will tell. I hope it is the former, as Brasil is an awesome expat assignment!

    #3
  4. eiioi

    richard, if you can convince us that each barrel of oil causes $3,500,000 in damages way out in the ocean, then you can talk about “being held responsible”.

    Otherwise, this is blatant extortion.

    #4
  5. Ricky Mearns

    Transocean again? the same company that owned the rig in the BP spill in the Gulf of Mexico. Duh! Sounds like a serial offender to me!!

    #5
  6. Jackalope

    Transocean again?

    #6
  7. CAD1936

    At least the Brazilian government has good sense in this matter!

    #7
  8. Winston Smith

    Maybe they value their coasts more than we do ours. I understand there’s still plenty of deadly oil in Louisiana marshes.

    #8
  9. sprocket1962

    Dave, Brazil is definitely an awesome ex-pat post! I don’t know what’s prompting Petrobras to extort the operators for such money though. Yeah, 3,000 bbl is “a lot” of oil, depending upon who you ask. To richard, an obviously ignorant person who probably drives a car and uses hydrocarbons on a daily basis, where will we find oil? “Take our business elsewhere?” Chevron et al have to go where the hydrocarbons ARE – not to the furthest landfill where you and the rest of the ignorant tree-huggers want it to be. Kindly show your ignorance elsewhere – or maybe better, keep posting to format that can show you up for your ignorance.

    #9
  10. CAD1936

    sprocket just cannot believe that a country would care more for its coastal environment than getting more royalties from negligent and non caring O & G companies. Power to the Brazilians and may the O & G spokesmen have to go to more trouble to call people who care ignorant and tree huggers. After all, you guys are telling us again “it’s just a garden hose variety spill” or “its a little spill in a big ocean”. At least the political leaders in Brazil aren’t buying it. The companies are gonna have to spend as much money in that country as they do in the U.S. to buy their way.

    #10
  11. nigel alkada

    Looks like we got the next location for our next war. Those politicians are not going to let someone take advatage of thier cash cow. Prepare your sons and dsaughters to be used as gun fodder for another political administration and corporate profit!!!

    #11
  12. tboyinhouston

    Glad to see a country actually holding companies responsible. Doesn’t happen here, that is for sure.

    #12
  13. LD

    Perhaps, it is extortion where want to run Chevron out and give the concession to Petrobras…..as they already know that there is oil….as indicated by the spill and well logs……

    #13
  14. Brazil is also a cunning political animal. With the looming World Cup, Olympics and its tourism industry as well as emerging oil economy opportunities, Brazil has a lot to protect. The $11 billion is close to half the compensation package put together by BP for its Macondo spill in 2010, and roughly the same as the final cost total for Exxon for its 1989 Alaska spill. The financial number helps us put this spill in the same zone. Lets hope the oil industry takes heed and future exploration and production is safer for people and the planet.

    Follow the debate: http://slickeconomist.wordpress.com

    Slick Economist

    #14
  15. 30weight

    Folks, Brazil does not need our help, especially this kind of help and this may be a message to just go home.

    #15
  16. Texasmike

    People complaining about the fine are obviously missing the point. It’s PUNISHMENT for screwing up, get it? Unless you think the only people who should be punished for crimes are the poor and minorities. I suppose we’ll see a few comments about how dare those Brazilian foreigners tell American companies what to do?

    #16
  17. raven

    Oh what’s this? I thought it was Obama’s grand plan for all the GoM rigs to pick up and plant themselves in foreign waters? Wait, so other countries also don’t appreciate oil in their waters and a reckless corporate safety culture? Go figure, you right-wing nut jobs.

    #17
  18. Peter North

    3000 bbl spill, oh the horror! Make one pass with dispersant and problem solved.

    #18
  19. Flash363

    This is how Obama works. The administration has already earmarked foreign aid funds to Brazil for their offshore exploration. The administration has strongly stated how happy they would be to have Brazil as another foreign oil supplier. Everyone of the people on the Chevron/Transocean rigs are American citizens. This administration is trying to drive the American oil workers out of the business whereever they can

    #19
  20. Dan X. McGraw

    Flash363, what’s your source?

    #20
  21. Trail Tramp
    #21
  22. Dan X. McGraw

    Thanks, Trail Tramp for providing the link.

    #22
  23. Observer

    Nationalization by any other name will surely stink just as much!

    #23
  24. Observer

    Maybe IBAMA is OBAMA’s brother; if so the picture becomes much clearer.

    #24
  25. CapeDawg

    I think he’s channeling Glenn Beck through a tin foil helmet.

    #25
  26. Kb

    “We haven’t seen anything in writing,” he said.
    ——————–
    It’s Brazil. The haven’t completed the list of politicians there for all the under the table cash they expect to get in the extortion, then you’ll get the “official” papers, telling you it’s gonna be 5 times that, and then we’re gonna do it agin in 6 months, like our government does. They’re gonna keep this thing going as long as you’re there. It’s the new cash cow. They learned it from the Democrats in D.C., and their lawyers.

    #26