Change of Prosecutor in Chevron Case

By Stephen Eisenhammer, Contributing Reporter

RIO DE JANEIRO, BRAZIL – A Brazilian judge has moved the two R$20 billion civil cases against American oil company, Chevron, and rig operator Transocean, for offshore oil leaks in Brazil, to a different court in Rio de Janeiro, removing the case from the hands of Brazilian prosecutor, Eduardo Santos de Oliveira.

The decision made Friday (April 13th) by judge Tiago Pereira Macaciel does not change the content of the charges, but removes them from Oliveira’s jurisdiction, handing them over to another team of prosecutors. In the court filing Judge Macaciel said “the magnitude of the environmental damage exceeds the area subject to the competency of Campos […] making it a regional damage (case).”

Chevron’s head of media relations, Kurt Glaubitz, said the company was pleased with the court’s decision which came at the end of a more positive week for Chevron and Transocean, with the emphasis of the case apparently shifting.

The two foreign companies have been subject to very public civil and criminal charges, as well as industry fines, following an oil spill of an estimated 2,400-3,000 barrels resulting from a drilling accident last November.

Matters worsened after another leak was discovered in March, just three kilometers away from the first spill. Following this second leak, Chevron closed its Frade Field in the Campos Basin, off the coast of Brazil, where the two spills had occurred.

However, for the first time in months events seem to be turning in favor of the two companies. Two days before the civil case was moved to another court in Rio de Janeiro, a judge denied an injunction calling for Chevron and Transocean to be banned from operating in Brazil indefinitely, with a daily fine of R$500 million for non-compliance. 

This decision combined with the moving of the court case, and the subsequent removal of Eduardo Santos de Oliveira from its helm, suggest a shift in the judicial or political position.

This is good news for Chevron and Transocean, whose future in Brazil’s oil industry seemed to be becoming increasingly tenuous, despite Chevron having invested over $2 billion to develop Brazil’s largest foreign-run oil field.

A public hearing in Brasília last week also saw a softening of the rhetoric against Chevron and Transocean. Federal Deputy Simão Sessim, who opened the hearing, called for “maturity” in discussions over the issue. He indirectly criticized the way the matter had been dealt with by the public prosecution, iterating that the hearing would not be seizing passports or threatening imprisonment.

The shifting momentum of the legal battle comes after Petrobras, the Brazilian state-controlled energy giant, was accused of its own oil spill in its Roncador Field, which borders Chevron’s Frade Field.

Although separate tests carried out by the Brazilian National Agency for Petroleum (ANP) and Petrobras later suggested that the leaked oil did not originate from a reservoir, but was most likely a paraffin based lubricant used in the drilling process, the incident was influential. It clearly demonstrated the strain and scrutiny under which oil companies are currently operating in Brazil.

Petrobras, whose influence in the Brazilian oil industry is difficult to overstate, recently came out against the cases against Chevron, calling them “unreasonable” and “disproportionately high relative to the extent of the damages caused by the spill.”