New Prosecutor Seeks to Stop Chevron’s Brazil Operations

By Leila Coimbra and Reese Ewing | April 20, 2012

A new prosecutor in the case against Chevron Corp and drilling firm Transocean Ltd for an offshore oil spill said Thursday he will seek to suspend the companies’ operations in Brazil, a sign that he may be just as tough on the companies as his predecessor.

Prosecutor Celso de Albuquerque Silva said he was seeking the injunction on grounds that the companies’ activities are dangerous to the environment and society. Chevron and Transocean face a combined $22 billion in lawsuits, and several executives face prison, because of two incidents in which oil leaked off Brazil’s coast in November and March.

A similar request by a different prosecutor in the same court was rejected last Wednesday. In that case, the judge said any suspension was the responsibility of Brazil’s national petroleum agency, and therefore outside the court’s jurisdiction.

Even if the court rejects this latest request, it shows that Silva may take just as hard a stance against the companies as the previous prosecutor, Eduardo Santos de Oliveira.

Oliveira was gradually stripped of his involvement in the cases over the past months. Some analysts had described Oliveira as overly aggressive, and said that a new prosecutor and other recent decisions in the companies’ favor could signal an easier road ahead for Chevron and Transocean.

“Brazil has some of the world’s strictest environmental protection laws,” said Rio de Janeiro-based energy consultant Jean Paul Prates. “When a big case gets transferred, the new prosecutors don’t want to seem soft. But over time, this will rationalize.”

Prates said the two fundamental questions that the legal actions will eventually address will be: What were the dimensions of the damage of the spill and who was affected.

Chevron said 2,400 barrels were spilled with “no discernable environmental impact to marine life or human health.”

The slick never reached shore and the spill was outside of Brazil’s national territory. Nobody was injured in the accident.

If the courts should accept prosecutor Silva’s request to suspend operations of the two companies, it would have a major impact on the whole oil sector. Transocean is one of the largest drilling contractors in Brazil and handles many fields for state-run oil company Petrobras.

Chevron owns 52 percent of the Frade field, where the accident occurred, Petrobras owns 30 percent and a Japanese group led by Inpex Corp and Sojitz Corp owns 18 percent.

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