Brazil Seeks $10.9 Billion from Chevron Over Oil Spill

A Brazilian prosecutor is demanding that Chevron ( IW 1000/7) and the oil drilling contractor Transocean pay $10.9 billion for a spill off southeastern Brazil last month, Chevron said on March 4. The penalty sought, "is arbitrary, speculative and not based on facts," the U.S. oil company said.

On March 4, an oil spill was detected at a depth of 4,200 feet, two miles from the site of a bigger spill that occurred last November in the Frade field operated by Chevron, some 230 miles northeast off Rio de Janeiro state.

"The oil spill from Frade has yet to be contained. The damage to the environment is immeasurable. Each new accident increases the damage and spotlights the mistakes of the accused," Eduardo Santos de Oliveira, the prosecutor from Campos, said.

Chevron had already been fined a total of $54 million after the first oil spill at the Frade field in November. And last month, federal prosecutors in Rio de Janeiro accused Chevron and 17 executives of "environmental crimes" in connection with the November spill.

The country's national oil regulator estimated that 2,400 barrels of crude were spilled in the accident, which led authorities to suspend all of Chevron's drilling operations and to deny the company access to huge new offshore fields.

Chevron dismissed the charges as "outrageous and without merit" and vowed to defend itself and its employees.

The prosecutors called for a "freeze on all assets of the accused, including 11 senior officials and employees from Chevron and five from Transocean," and an environmental expert.

The state prosecutors noted that the charges were based on "conclusions of the police investigation into the November 7, 2011 accident which occurred because the accused did not respect safety procedures." They called for payment of bail of $550,000 for each person accused and $5.5 million for each company.

"These charges are outrageous and without merit," Chevron said in a rebuttal. "Once all the facts are fully examined, they will demonstrate that Chevron and its employees responded appropriately and responsibly to the incident. Chevron will vigorously defend the company and its employees," it added.