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Chevron Oil Spill: Brazil Workers Sue Oil Company For Environmental, Financial Damages

First Posted: 03/28/2012 11:57 am Updated: 03/29/2012 12:36 am


* Oil workers' union sues Chevron and Transocean

* Lawsuit seeks to cancel Chevron concession at Frade field

* Union seeks to ban Transocean from working in Brazil

* Suit seeks unspecified financial damages for Nov. spill

By Jeb Blount

RIO DE JANEIRO, March 28 (Reuters) - Brazil's largest oil workers union filed a lawsuit against U.S. oil company Chevron and drilling firm Transocean that seeks to cancel their rights to operate in the country as the result of an offshore oil spill last November.

The case, brought by the FUP oil workers federation in Brazilian federal court, raises the legal and political stakes for Chevron and Transocean which are already fighting criminal and civil cases related to the spill.

FUP, which has long opposed foreign involvement in Brazilian oil development, said Chevron and Transocean "offended the Brazilian people" with "predatory and environmentally unsound practices."

FUP wants the court to force Chevron to give up a field that has cost about $2 billion in investment and was producing up to 80,000 barrels a day of oil. It also seeks unspecified financial damages for the Brazilian people.

In addition to the Sedco 706 drill platform working for Chevron, Transocean has nine other billion-dollar-plus rigs working in Brazil. Each earns hundreds of thousands of dollars a day in lease fees.

"Chevron lied to the Brazilian state," Joao Antonio Moraes, FUP's legal coordinator, told Reuters.

"We're seeking the cancellation of their concession in the field where their operations have shown to be predatory and environmentally unsound."

Kurt Glaubitz, Chevron's spokesman in Rio De Janeiro, and Transocean spokesman Guy Cantwell in Houston had no immediate comment on the suit. Both have said the previous charges against the companies and their employees are without merit.

The November spill in the Frade field about 120 kilometers (74 miles) off Brazil's coast leaked about 3,000 barrels of oil in the Atlantic, less than 0.1 percent of BP's Deepwater Horizon spill in the Macondo field in the Gulf of Mexico.

Chevron and its partners Petrobras and a Japanese group led by Inpex and Sojitz asked for and received permission to shut down production at the Frade field northeast of Rio de Janeiro after finding small, unexplained leaks early this month.

FUP's case also asks the court to order Chevron and Transocean to compensate Brazil for royalties that have been lost to delays related to the spill and shutdown, according to Normando Rodrigues, the lawyer responsible for the case.

The companies also drilled for oil reservoir targets under a layer of salt without seeking permission from the ANP, Brazil's oil regulator, he said.

Transocean, he added, has a history of technical failures, including the 4.9-million-barrel BP disaster in the United States and a series of technical problems, oil leaks and fatal accidents working for Chevron and state-led oil company Petrobras in Brazil's Campos Basin.

"Transocean has a history of technical failures and notorious involvement in the Gulf of Mexico disaster," Rodrigues said.

The Campos Basin, home to the Frade field, produces about 80 percent of Brazil's 2.68 million barrels a day of oil and natural gas equivalent output.

FUP, which is made up of 13 separate unions in Brazil, represents more than 300,000 workers in Brazil's oil industry. It does not represent any Chevron or Transocean workers in Brazil.

Past Brazilian oil spills by Brazil's state-run Petrobras , including some larger ones, have never prompted criminal charges.

Brazilian oil regulator ANP told a Senate hearing last Thursday that a report on the spill does not find Chevron negligent in the drilling of the well that caused the spill, a finding that may help the company in its mounting legal battles in Brazil, one of the world's most promising oil frontiers.

The ANP said its report found that Chevron failed to follow procedures, broke safety and operational norms and that the design of the well that leaked showed errors.

Chevron and Transocean have said that they have done nothing wrong, have cooperated with authorities and that they followed industry norms.

San Ramon, Califorina-based Chevron is the No. 2 U.S. oil company. Transocean, based in Switzerland, is the world's largest offshore oil-rig operator.

Chevron stock fell 0.85 percent to $106.13 in New York. Transcocean fell 2.83 percent to 48.78 Swiss francs.

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