In an unprecedented move, the federal public ministry has filed criminal charges against 17 workers from the US companies Chevron and Transocean for an oil spill in the Campos basin, off the coast of Rio de Janeiro state, in November 2011. Federal prosecutors said that the 17, which include Chevron’s local boss George Buck, could face a jail sentence of up to 21 years each for presiding over a “contamination time bomb”. Chevron rejected the charges – for environmental crimes and damage to public patrimony – as “outrageous and without merit”. The case has put the wind up the entire industry, which is operating in unchartered territory in Brazil’s offshore ultra-deep Atlantic waters.
Chevron and its partner Transocean, which was responsible for the drilling – and which, incidentally, was also at the centre of the BP oil spill disaster in the Gulf of Mexico in 2010 – are already facing an US$11bn civil lawsuit and a string of official fines.
The federal government is taking a stern line, on the grounds that while the actual leak was relatively small, Chevron was in effect running a potentially very hazardous operation in the only field it operates (as the majority partner) in Brazil, the Frade. Chevron has a 52% stake in the field; Brazil’s state oil company, Petrobras, has a 30% stake; and a joint-venture, Frade Japan, has 18.3%. Chevron has invested over US$2bn to develop the field. Between 2,400 and 3,000 barrels of oil escaped from the seabed in the November incident, leading to the suspension of Chevron’s drilling rights in the country.
Awkwardly, last week, Chevron was forced to suspend production completely in the Frade, after a fresh oil seepage was discovered. Chevron denies that it caused the second leak, suggesting it could be a natural seepage, typical of the area. Fabio Scliar, the head of the federal police environmental division in Rio de Janeiro, concluded in a report in late 2011 that the well at the centre of the November spill “should not have been drilled”.
Federal prosecutors thus argued that Chevron knew that it was operating at the very edge of acceptable safety standards. The leak occurred after the wall of the well broke, presumably the result of undue drilling pressure. In its file, the public ministry also said that the national petroleum agency (ANP) had detected “very serious faults” in equipment on the Transocean-operated SEDCO platform used by Chevron for drilling activities. Chevron insists that it operated well in line with safety standards at all times, noting that the authorities, including the ANP, gave their approval at each and every stage.
A judge will now rule on whether to proceed with a formal case, which would likely drag on for years, obliging the companies to fork out billions in legal fees. In the meantime, the judge has ordered the seizure of assets and set bail at R$1m (US$549,000) each for the 17 executives. Late last week the federal prosecutor leading the case, Eduardo Santos de Oliveira, instructed the executives to hand in their passports and suggested that he could also request their preventative detention should the criminal charges proceed. Chevron is also facing an US$18bn case in Ecuador, leading some sector analysts to speculate that high costs may force it to rethink its operations in Latin America.
Petrobras has faced much lesser sanctions over bigger leaks, prompting some to suggest that the federal case is not only a warning to the entire industry but may also be politically motivated.
- Middle class falls for Dilma
According to leaked details of the latest (March) national public opinion survey by Ibope for the National Confederation of Transport (CNT), set for publication in early April, President Dilma Rousseff’s approval rating has continued to rise. In December the government’s approval rating was 56% in the Ibope poll, a high for any administration at the end of its first year in office. Most notably, support for Rousseff has risen most among the middle class, which is bad news indeed for the weakened opposition Partido da Social Democracia Brasileira (PSDB) ahead of the 2014 general election. It also underlines the fact that Rousseff’s main opposition for the foreseeable future will continue to come from within.
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