Chevron Facing Revived Charges Over 2011 Brazil Oil Leak

By Eduardo Pagnoncelli, Contributing Reporter

RIO DE JANEIRO, BRAZIL – Chevron Corporation confirmed on Friday that a Brazilian appeals court has reinstated criminal charges against the energy giant and eleven of its employees, originating from a 2011 offshore oil spill near Rio de Janeiro, that also led to a reported R$95 million civil settlement by the company last year.

The Brazilian Agência Nacional do Petróleo (ANP, National Oil Agency) said that approximately 3,700 barrels of oil were spilled in the sea, spreading over an area of one square kilometer. At the time the president of Chevron Corp. in Brazil, George Buck, apologized to Brazilian citizens and government for the accident.

In 2013 Chevron Corp. reached a settlement with the Brazilian government. However, the same prosecutor’s office that helped drop the charges against the company is now working to re-open the criminal part of the case. “The prosecutors are trying to show that the defendants’ arguments that there is no proof of an environmental crime are wrong,” the prosecutors said in a statement.

According to the prosecutors there is enough evidence showing that Chevron is responsible for environmental pollution, which includes the spilling of residues, unauthorized extraction of mineral resources, irregular operations with the potential to pollute, damage to public assets and other crimes.

Chevron wants to question the ruling and believes the Brazilian justice system is being particularly rigorous as Chevron is an American company. Other similar cases of oil spills happened in Brazil in the past three years and involved Brazilian state owned oil giant Petrobras. According to statements released by Chevron Corp. however, such cases weren’t considered as serious and the criminal charges weren’t as harsh.

Although Chevron has accepted full responsibility for the accident since it happened almost three years ago, the defendants could face up to thirty years in jail if convicted. The case – now reopened – will return to the 10th Federal Criminal Court in Rio de Janeiro, the same court that dismissed the case in January 2013 shortly after Chevron reached an agreement with prosecutors and Brazil’s environment agency over the spill.

Even though Chevron was absolved of negligence in the case, the American energy giant had to stop all its activities in the Frade Field for about a year and a half, and also received a fine from Brazilian petroleum regulator ANP.

Chevron has appealed against the reinstated charges, saying its Brazilian branch responded appropriately to the incident and said in a statement, “We are confident that once all the facts are fully examined, they will demonstrate that the company responded appropriately and responsibly to the incident and that there is no damage to the environment or risk to human health associated with the incident.”

The reaction to the leak in 2011 seemed to signal a shift in many multinational oil companies’ interest in Brazil, along with high costs and lower-than-expected profit margins. In October 2013, it was only Europe’s Shell and Total, with two Chinese companies, that bid on the pre-salt Libra offshore oil, Libra, to operate with Petrobras.

Eleven companies had already paid millions upfront just to be eligible to take part, but that figure was expected to be nearer forty. With just one bid tabled, the 41.65 percent minimum amount of ‘profit oil’ – the production that had to be guaranteed to the state as part of any bid – was not exceeded.