Brazil Reacts to Chevron Oil Leak

By Brennan Stark, Contributing Reporter

RIO DE JANEIRO, BRAZIL – American oil giant Chevron was banned from offshore drilling in Brazilian waters on November 23rd.  The National Petroleum Agency (ANP) claimed Chevron’s drilling would remain suspended until the causes of the oil leak discovered November 8th approximately 230 miles (370km) off the coast of Rio de Janeiro became evident.

The ban was implemented just two days after Chevron received a R$50 million fine (later increased to R$100 million) from Brazil’s Ministry of the Environment for the environmental damage caused by the leak.

Environment minister Izabella Teixeira warned that Chevron may face additional penalties if the current investigation reveals further infractions.

Spearheading the investigation is the Federal Police’s Bureau Chief of the Environment Fabio Scliar, who claimed that, “If the issue is beyond human error, the penalties [will be] much higher,” specifically, the current ban the company is facing.

The company faced additional scrutiny when on November 25th Rio’s environment secretary, Carlos Minc, announced that Chevron would be required to undertake an audit to verify the company’s capacity to respond to environmental disasters.

The audit will be performed by an independent organization and paid for by Chevron. “It will be an audit of international standard that is expected to cost around US$5 million,” claimed Minc.

If Chevron remains banned in the future, it will lose the opportunity to bid on offshore drilling rights for Brazil’s massive “pre-salt” oil fields in 2012, potentially costing the company billions.

Shortly after the oil leak began in the Frade Field in the Campos Basin, the head of Chevron Brazil, George Buck, apologized for the incident before the Brazilian parliament. “We are going to thoroughly investigate the accident and present the results to the Brazilian people … so that this does not happen again, either here or in any other part of the world,” he stated.

The president of Chevron for Africa and Latin America, Ali Moshiri, announced on November 24th that the leak was under control and that the slick some 75 miles (120km) from Rio’s coastline had practically disappeared.

Environmental activists, however, believe that Chevron’s optimism is merely an attempt at damage control.  Skytruth, an environmental protection group that uses digital mapping technology to study environmental disasters, said satellite imagery showed the slick was much larger than that announced by Chevron.

At the height of the spill, ANP reported that between 200 and 330 barrels of oil a day were being released from the ocean floor.   By comparison, the BP deep-water spill in the Gulf of Mexico last year saw over 3,000 barrels of oil a day leaking into the gulf.

Industry expert Jim Kappeler, an American who has lived and worked in Rio for years, offers: “I am surprised at how poorly Chevron is being treated by ANP and the Brazilian Federal Police. The politicians have no idea how much Brazil needs the foreign operators both for their capital investment and know how. It would be a disaster for Brazil if Petrobras would have to finance and be the operator on all of Brazil’s oil all by themselves.”

Brazil hopes to become the third largest oil producer by 2020 as a result of its development of the “pre-salt” region.