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Chevron Oil Spill: Brazil Official Sees $28 Million Fine For Company

Brazil Chevron Oil Spill

TALES AZZONI   11/21/11 05:40 PM ET   AP

SAO PAULO — Brazil's environmental agency said Monday it will fine Chevron nearly $28 million for a continuing oil spill off the Rio de Janeiro coast, and the company could face several more similar fines in the coming days.

The agency said through its press office that it will fine the oil company the maximum 50 million reals allowed under current Brazilian law.

Environment Minister Izabella Teixeira said at a press conference in Brasilia, however, that as an investigation into the leak continues, Chevron could face "five or six" other fines of the same amount if more infractions are found.

Rio de Janeiro state's environment secretary, Carlos Minc, said the national government will also ask Chevron to pay for damages caused by the Atlantic spill.

"We believe the accident could've been avoided. There was an environmental crime," Minc told Globo TV and other Brazilian media. "They hid information and their emergency team took almost 10 days to start acting."

Teixeira and other officials said Chevron hid information about the extent of the spill from the Brazilian government, took far too long to begin clean-up operations and didn't have the proper equipment to contain the leak.

Chevron Corp. officials have accepted responsibility for the spill but reject accusations they did not notify local authorities quickly enough or properly manage the cleanup.

Minc said he considers the environmental agency's fine lenient, but opened the possibility that other fines could eventually be added under Rio de Janeiro state law. In addition, Brazil's National Petroleum Agency could even consider banning the company from operating in Brazil for a limited time.

"There was negligence," Minc said. "Rio will not allow any kind of environmental impunity."

He said Chevron, based in San Ramon, California, will be expected to pay about $5.6 million in reparation for the damage to the environment.

"We are still calculating the costs," Minc said. "Part of that money we want to use to increase the monitoring of our ocean."

Brazilian President Dilma Rousseff was expected to meet with the national environmental minister and its mines and energy minister to discuss the oil spill and determine the government's actions.

The National Petroleum Agency said more than 110,000 gallons (416,300 liters) of crude oil may have reached the ocean floor since the leak began Nov 7.

George Buck, chief operating officer for Chevron's Brazilian division, said Sunday the spill occurred because Chevron underestimated the pressure in an underwater reservoir.

Chevron was drilling an appraisal well about 230 miles (370 kilometers) off the northeastern coast of Rio de Janeiro when the leak started as crude rushed upward and eventually escape into the surrounding seabed.

The oil has leaked through at least seven narrow fissures, all within 160 feet (50 meters) of the well head on the ocean floor.

Eighteen boats work on a rotating basis on the slick, with a varying number of vessels working simultaneously, Buck said.

The leak is a test for Brazil as huge offshore oil finds have been announced recently, with estimates they could hold at least 50 billion barrels of oil.

Brazil has had bigger oil spills. In 2000, crude spewed from a broken pipeline at the Reduc refinery in Rio de Janeiro's scenic Guanabara Bay, dumping at least 344,400 gallons (1.3 million liters) into the water. Just a few months later, more than 1 million gallons (3.8 million liters) of crude burst from a pipeline operated by state-controlled oil company Petrobras into a river in southern Brazil.

Brazil's worst oil disaster was in 1975, when an oil tanker from Iraq dumped more than 8 million gallons of crude into the bay and caused Rio's famous beaches to be closed for nearly three weeks.

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(This version CORRECTS typographical error in 13th paragraph to make word 'leak' rather than 'lead.')

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Filed by Chris Gentilviso  |