Transocean Operating in Brazil’s Oil Boom

By Laura Madden, Contributing Reporter

RIO DE JANEIRO, BRAZIL – After reports that federal prosecutors in Campos, of northern Rio de Janeiro state, are seeking US$10.8 billion from Transocean following the oil leak in Chevron’s Frade Field well, many eyes outside the oil industry have taken notice of this multinational firm in Brazil.  The company, with 18,000 employees worldwide reported US$9.576 billion in revenue in 2010, and is the world’s largest offshore drilling contractor.

The Swiss company’s most recent 10-K filing with the U.S. Securities and Exchange Commission – a comprehensive annual summary of a public company’s performance – includes Brazil among its top four countries of operating revenues, coming in second to the U.S., and before the U.K. and India.

Highlights of the company’s history in Brazil include the country’s first jackup drilling rig in 1968 and world water-depth drilling records in 2001.

In 2007, Petrobrás made what is widely considered the Western Hemisphere’s largest oil discovery in thirty years, the Tupi field. Expanding their deep-water drilling operations off Brazil’s coast, Transocean opened operational and training offices in Macaé, and a third office in Rio de Janeiro.

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

Today Transocean has ten rigs in Brazil’s deep waters, seven of them contracted by Petrobrás. Transocean’s most expensive rig in Brazil operates at US$535,000 per day. None of the other nine cost less than US$253,000 per day.

In addition to Transocean’s corporate and operational presence in Brazil, the company has a Social Responsibility Committee to meet area needs in Macaé. Initiated in 2002, the committee has donated computers and medical supplies to local charities and scrap metals to a local recycling center.

Unfortunately, along with all this positive news also comes the November Chevron oil leak, just 230 miles off Brazil’s coast. The leak was plugged within days, but sparked off a round of fines by two separate government agencies, investigations by the Federal Police, and a state lawsuit.

The weekly magazine The Economist has called the fines and lawsuits an “exaggerated” overreaction. In a statement about the incident, the Transocean said, “We believe the recommended indictments are without merit and we will vigorously defend the company and our employees.”

“The question is: will they be better prepared next time because they were fined?” says Jim Kappeler, an oil industry expert who has lived and worked in Rio for years. “Here in Brazil we have had a lot more time spent on arguing how we will divide the profits than what it takes to finance and operate safely.”

Kappeler adds, “In the gulf [U.S. President] Obama also showed a lack of understanding and the U.S. government [is not able] to be the watch dog,” he says, referring to Transocean’s Deepwater Horizon. The platform caught fire in April of 2010 and sank in the U.S.’ Gulf of Mexico, killing eleven.”

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. At the height of the Rio de Janeiro spill, ANP reported that between 200 and 330 barrels of oil a day were being released from the ocean floor.