A Brazilian federal prosecutor filed criminal charges on Wednesday against Chevron and drill-rig operator Transocean for a November oil spill, raising the stakes in a legal saga that has added to Chevron’s woes in Latin America and could slow Brazil’s offshore oil boom.
Prosecutor Eduardo Santos de Oliveira also filed criminal charges against 17 local executives and employees at Chevron and Transocean, owner of the world’s largest oil rig fleet. Among the defendants is George Buck, 46, a US national in charge of Chevron’s operations in Brazil, the prosecutor’s office said in a statement.
“The spilling of oil affected the entire maritime ecosystem, possibly pushing some species to extinction, and caused impacts on economic activity in the region,” Santos de Oliveira, a prosecutor in the oil district of Campos de Goytacazes, said in the filing. “The employees of Chevron and Transocean caused a contamination time bomb of prolonged effect.”
The charges stem from a 3,000-barrel leak in the Frade field, about 120km off the coast of Rio de Janeiro State. They include: failure to realize protocols to contain the leak; failure to take steps to kill the well and stop the drilling process; breach of licenses, legal norms and regulation, including altering documents; and failure to meet legal and contractual duties.
Chevron and Transocean strongly disputed the charges.
“These charges are outrageous and without merit,” Chevron said in a statement. “Once all the facts are fully examined, they will demonstrate that Chevron and its employees responded appropriately and responsibly to the incident.”
Transocean “strongly disagrees with the indictments,” spokesman Guy Cantwell said.
Chevron said it stopped the leak in four days. None of the oil that leaked into the Atlantic reached shore or interfered with marine life, it said.
In November, the same prosecutor filed an US$11 billion civil lawsuit over the spill, the largest environmental suit in Brazil’s history. Chevron has already been fined around 200 million reais (US$110 million) in fines for the spill by environmental and oil regulators.
Chevron’s shares dropped 1.1 percent to US$107.91 on Wednesday, to their lowest in nearly a month. Transocean’s US-traded shares dropped 1.1 percent to US$56.77.
Observers warned that the criminal charges could spook foreign companies attracted to Brazil’s offshore oil boom and slow development of more than 50 billion barrels of reserves discovered there since 2007.
“These charges are being used by those who want to shut out foreign investment and vilify foreign companies,” said Adriano Pires, head of energy think tank Brazilian Infrastructure Institute, and a former oil regulator.
The Chevron leak was less than 0.1 percent of the size of the 4 million-barrel BP oil disaster in the Gulf of Mexico in 2010. Transocean also owned the rig in that spill. Past Brazilian oil spills by state-run Petrobras, including some larger ones, have never prompted criminal charges.
In addition to Buck, prosecutors leveled criminal charges against other Chevron and Transocean employees, including five other Americans, five Brazilians, two Frenchmen, two Australians, a Canadian and a Briton. Among them was Guilherme Dantas Rocha Coelho, 38, the Brazilian head of Transocean’s operations in the country.
All were ordered to turn in their passports last Saturday and remain in the country. Each individual will be required to post 1 million reais bail and each company 10 million reais to ensure payment of future fines.
Prison sentences could be as lengthy as 31 years, the filings said. Oliveira said in January that jail terms for the oil workers would be unlikely and a “last resort.” On Wednesday, however, he said the executives should be jailed.
“Yes, I want them to serve the full time and if they don’t it won’t be for any lack of effort by the Federal Prosecutors’ Office,” he said at a news conference in Rio de Janeiro.
Under Brazilian law, a judge must examine the charges and determine whether to proceed with formal indictments, a process that could take days or weeks. Either way, Chevron and Transocean likely face years of legal action in Brazil, one of the world’s most promising oil frontiers.
Few individuals or companies have ever been convicted of environmental crimes in Brazil, and fewer have gone to jail.
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