Chevron Racks Up More Fines in Brazil

By Laura Madden, Contributing Reporter

RIO DE JANEIRO, BRAZIL – The American oil company Chevron was fined another R$10 million on December 23rd by the IBAMA (Brazilian Institute of Environment and Natural Resources). Then just a week later they were fined again, for an unspecified amount, on December 30th by the Brazilian National Oil Agency (ANP).

This is the aftermath of the company’s Frade field oil well leak on November 8th in the Campos Basin off the northern coast of the state of Rio de Janeiro.

Chevron in Brazil had already been fined twice by ANP, the first time for not having the necessary equipment on hand to execute the Well Abandonment Plan in place when they applied for their drilling license.

According to the Associated Press, Chevron said in an e-mailed statement about the Frade field leak response: “The plan was deployed rapidly and standard procedures were quickly carried out in order to stem the source of the leak.”

“In just four days, a period considered excellent by industry experts, the company managed to control the source of the leak, starting the process to significantly check the flow from the seeps, which has now diminished to intermittent droplets.” the statement said.

Then on December 1st, the Brazilian National Oil Agency (ANP) slapped Chevron with a second fine for a reason independent of the leak. In a statement on its website, the ANP said hydrogen sulfide was found in Chevron’s production operations on the structures and equipment of a production platform.

In a separate civil action, Brazil’s Federal Public Ministry (MPF) in Campos, along Rio State’s northern coast, filed a lawsuit in December against the U.S. oil company’s Brazilian subsidiary. The state also names Transocean, hired by Chevron to perform the drilling of the well, as jointly responsible.

In the lawsuit, the MPF states that Transocean was using platform model SEDCO 706, the same used at the time of the BP oil spill in the Gulf of Mexico in April of 2010. The MPF lawsuit seeks damages of R$20 billion for environmental and social damage caused by the oil spill.

The Federal Police also concluded an investigation last month, charging seventeen people from Chevron and Transocean with environmental crimes. Included in the list of those responsible is George Buck, president of Chevron’s operations in Brazil.

On December 23rd, Chevron was also fined for a second time by IBAMA (Brazilian Institute of Environment and Natural Resources) for R$10 million, this time for noncompliance with the conditions of its environmental permit.

According to IBAMA’s website, an analysis showed that Chevron failed to follow the individual emergency plan (PEI) approved at the time the drilling of the well was licensed. The first penalty, for R$50 million in November, was for the actual spill of oil into the ocean.

Industry expert Jim Kappeler, who lives and works in Rio, doubts the fines, lawsuits and a drilling suspension will scare investors away from Chevron. “It is hard to see how they can prove the damage. If it does stick it will hurt the Brazilians the most since of course the costs [of drilling and production in Brazil] will go up.”