Brazil prosecutor targets oil giants

A Brazilian federal prosecutor has launched a second $10.9bn lawsuit against US oil company Chevron and drilling company Transocean following the discovery of a second leak in the offshore Frade oil field earlier this month.

The new lawsuit, announced on Tuesday by the federal public prosecutor’s office, is prosecutor Eduardo Santos de Oliveira’s second civil case against the companies in less than five months.

The case also seeks to prevent Chevron and Transocean from operating in Brazil, transferring Brazilian profits overseas, obtaining government-backed finance and moving equipment from the country, the statement said.

The prosecutor’s office said that Santos de Oliveira also planned to investigate Brazilian national oil regulator ANP and environmental protection agency Ibama over their handling of the November spill and latest leak, discovered on March 4, at the Frade field, northeast of Rio de Janeiro.

“The second leak is as serious or more serious than the first, so the damages have to be in the same category,” de Oliveira told Reuters. “While they are not a simple mathematical calculation, they are not symbolic either.”

Chevron and Transocean’s activities may have damaged the Frade reservoir, making it impossible to produce from the field, denying Brazil its right to royalties on a public resource, Santos de Oliveira added.

Santos de Oliveira has called last year’s estimated 3,000-barrel spill one of Brazil’s worst-ever ecological disasters, although the leak amounted to less than 0.1 per cent of BP’s 2010 Deepwater Horizon disaster in the Gulf of Mexico.

Chevron said the March leak, which led to the latest lawsuit, resulted in a spillage of just two barrels. Unlike in the Gulf of Mexico, no Chevron oil came near the coast.

BP last month agreed to pay out $7.8bn to more than 100,000 people who said they were hurt by US spill in which 11 people died and about 4.9bn barrels were leaked over three months.

Cases ‘arbitrary’ and ‘irresponsible’

Both Chevron and Transocean have said they have done nothing wrong, that they are innocent of any crimes and will defend their employees against civil and criminal charges.

“Transocean acted responsibly appropriately and quickly, putting safety first. We’ll continue to strongly defend our company, our people and the quality of our services,” Transocean, the world’s largest drill rig operator said in a statement.

“The filing of the second lawsuit is another in a series of outrageous actions brought by the same district attorney who previously filed both a criminal and civil case, all of which are without merit,” Chevron said in a statement, calling the $10.9bn figure “arbitrary”.

The size of the damages have also caught the attention of politicians close to Brazilian President Dilma Rousseff’s government.

Jorge Viana, a senator from Rousseff’s Workers’ Party and one of the country’s leading environmentalists, said the damages being sought were “irresponsible” and if applied to all companies working in the country could lead to the shutdown of Brazil’s oil industry.

The industry generates revenue worth more than 10 per cent of gross domestic product in Brazil, the world’s sixth-largest economy.