Chevron Execs Banned from Leaving Brazil

By Stephen Eisenhammer, Contributing Reporter

RIO DE JANEIRO, BRAZIL – A federal judge in Rio de Janeiro has barred seventeen executives from Chevron and Transocean from leaving Brazil until criminal charges relating to an oil spill last November are processed. The executives were under court orders to hand in their passports by Sunday, while they await criminal charges which are expected to be filed on Wednesday.

The judge’s request comes just days after a fresh oil leak was spotted at Chevron’s Frade Field in the Campos Basin, the same area of the high-profile oil spill last November.

Chevron, which is America’s second largest oil company after Exxon, has since been granted permission from Brazil’s National Agency for Petroleum (ANP) to temporarily suspend production at their Frade Field operation following the discovery of the new oil leak.

The suspension of operations is a “precautionary measure” which will allow Chevron to “conduct a comprehensive technical study […] to better understand the geological features of the area,” the company said in a statement. The Frade field was producing a total of approximately 60,000 barrels per day at the time of closure.

Two days earlier, the ANP renewed Chevron’s ban on drilling new wells in Brazil until the company can convincingly demonstrate they understand exactly what caused the November leak. “Safety legislation provides that the operator must be able to identify the causes of the accident and present measures to be taken to mitigate the accident and avoid a repeat,” Magda Chambriard, the new director of ANP said last Tuesday.

President of Chevron for Africa and Latin America, Ali Moshiri, said the next day that he “respected” the ANP’s decision following a meeting with Brazil’s energy minister Edison Lobão.

However, a smooth resolution to this issue is beginning to look unlikely. Chevron’s fast and decisive response to Thursday’s oil spill may be in stark contrast to the corporate dithering they demonstrated last November, but the ANP have made it clear that they aim to make an example of the American company.

The case is sending a strong message out to foreign companies aiming to tap into Brazil’s extensive offshore oil reserves.

Despite the relatively small size of last November’s spill, in which 2,400 to 3,400 barrels of oil are estimated to have leaked from the ocean floor (less than 0.1 percent of BP’s 2010 Gulf of Mexico spill) Chevron have faced extensive legal process and fines of R$60 million.

Along with the rig operator Transocean, Chevron, is being sued for more than US$11 billion by Brazilian prosecutors, the largest environmental damages case in the country’s history.

Accusations of biased treatment have been widespread with Chevron officials alleging that the ANP acted hastily and that the treatment given to the company by the industry regulator has not been proportionate to the damage caused by the spill.

Such an opinion appears to be supported by data suggesting that Petrobras leaked twice as much oil as the Chevron spill in 2010 alone without facing any legal action. Petrobras also reported two minor oil spills in less than a week at the end of January this year, three in the first two months of 2012, seemingly without corresponding repercussions.