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Brazil Oil Union Files Suit to Suspend Chevron, Transocean

Brazil’s main oil union filed a civil lawsuit that seeks to cancel Chevron Corp. (CVX)’s contracts and prohibit Transocean Ltd. (RIG) from operating in the South American country after an oil spill last November at the Frade field.

Chevron, the second-biggest U.S. oil company by market value, and U.S. rig operator Transocean didn’t comply with security requirements at the Frade project and aren’t fit to operate in Brazil, said Leopoldino Martins, the head of legal and institutional affairs at the union.

“We’re seeking the suspension of the contract in Brazil for an undetermined period of time, and the payment of fines as well,” Martins said in a telephone interview from Rio. “They don’t have the technical conditions to operate.”

The lawsuit is the latest legal action against Chevron after it spilled an estimated 3,000 barrels at the Frade field offshore Brazil last year. Executives at Chevron and Transocean have been charged with environmental crimes and may face prison sentences of as many as 31 years, based on charges by Federal Prosecutor Eduardo Santos from Campos.

Chevron hasn’t seen the union’s lawsuit and can’t comment at this time, Kurt Glaubitz, a spokesman for Chevron, said in an e-mailed statement. Transocean’s press office declined to comment in an e-mailed response to questions.

10 Drilling Rigs

Transocean has 10 offshore drilling rigs operating in Brazil for producers including Petroleo Brasileiro SA (PETR4), the state-controlled producer, according to the U.S. company’s website. Petrobras, as the Rio de Janeiro-based producer is known, and other oil companies would be able to rent drilling equipment from other suppliers, said Martins.

“In Brazil these crimes could happen someplace else tomorrow,” he said. “Petrobras has other well prepared companies that they can partner up with.”

Chevron, based in San Ramon, California, halted production this month at Frade as a precautionary measure after reporting new seeps of oil from the seabed at Frade. It also has a minority stake in the Papa Terra offshore oil project that doesn’t yet produce crude.

Chevron fell 1.6 percent to $105.38 at 1:06 p.m. in New York. Transocean dropped 3 percent to $53.09.

Transocean, the world’s biggest owner of offshore rigs, is based in Vernier, Switzerland.

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

To contact the editor responsible for this story: Dale Crofts at dcrofts@bloomberg.net

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