Chevron Halt Sought by Brazil Prosecutors as Remedy to Spill

Chevron Corp. (CVX) and Transocean Ltd. (RIG) should halt operations in Brazil and pay 20 billion reais ($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. (XOM), 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.

Source: Agência O GLOBO/Marcia Foletto/AFP/Getty Images

A supply boat works around an oil spill at the Frade field located in the Atlantic Ocean some 370 Km northeast of Rio de Janeiro, on Nov. 18, 2011. The spill, at an offshore well operated by the US energy giant Chevron Close

A supply boat works around an oil spill at the Frade field located in the Atlantic... Read More

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Source: Agência O GLOBO/Marcia Foletto/AFP/Getty Images

A supply boat works around an oil spill at the Frade field located in the Atlantic Ocean some 370 Km northeast of Rio de Janeiro, on Nov. 18, 2011. The spill, at an offshore well operated by the US energy giant Chevron

‘Responded Responsibly’

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.”

Scott Walker, a Chevron spokesman, declined to comment or make executives available to answer questions.

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.

To contact the reporters on this story: Peter Millard in Rio de Janeiro at pmillard1@bloomberg.net; Rodrigo Orihuela in Rio de Janeiro at rorihuela@bloomberg.net

To contact the editor responsible for this story: Carlos Caminada at ccaminada1@bloomberg.net

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