A Review of the Nigerian Energy Industry

Chevron offers $150m for Brazil oil spill

15 December 2012, Sweetcrude, Rio de Janeiro – Chevron is willing to pay about 300 million reais ($150 million) to settle lawsuits over last year’s offshore oil spill in Brazil, according to a report quoting a senior executive and a federal prosecutor.

This might open up avenue for early settlement of differences over the spill between the Brazilian authorities and Chevron and its drilling contractor, Transocean.

“We could have an agreement before Christmas,” Gisele Porto, the prosecutor responsible for the case, said after a public hearing, Reuters reports.

She said she is drafting a settlement for a total of 311 million reais. Chevron and Transocean face up to $20 billion in damages and some of their executives face jail terms of up to 31 years in the largest environmental prosecution in Brazil’s history.

Porto said a judge is unlikely to accept the steep fines sought by the prosecutor who first filed the charges.

Courts have also overturned drilling bans against Chevron and Transocean in recent months, allowing the companies to resume operations in Brazil, home to some of the world’s largest offshore oil discoveries of the past decade.

Using settlements following larger spills in the United States like the Exxon Valdez and the Deepwater Horizon disaster in the Gulf of Mexico as a benchmark, Chevron lawyers calculated environmental damages of 30 million reais would be reasonable in the Brazil case.

Chevron would be willing to pay three times that in damages, said Rafael Jaen Williamson, director of corporate affairs in Brazil, along with other measures to prevent future spills, bringing the cost of a settlement to around 300 million reais.

Prosecutors initially sought far larger penalties for the 3,600-barrel spill in the Frade Field northeast of Rio de Janeiro in November 2011, although the spill was far less severe than other recent offshore accidents.

No one was hurt in the Frade accident. No oil reached shore, and there was no discernable environmental damage, according to Brazil’s petroleum regulator, the ANP.

More than 5 million barrels of oil were spilled in the 2010 Deepwater Horizon disaster in BP Plc’s Macondo field. Eleven people died in the accident, and beaches and fishing grounds were polluted.

On 15 November BP agreed to pay a record $4.5 billion in penalties and plead guilty to criminal misconduct charges in the United States.

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