Brazil oil regulator: Chevron leak not "negligence"

Thu Mar 22, 2012 8:14pm EDT
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By Jeb Blount

BRASILIA (Reuters) - Brazil's oil regulator said Chevron was not negligent in the drilling of a well that caused an offshore oil spill in November, a finding that may help the company to fight criminal charges and an $11 billion lawsuit.

Chevron and its drilling contractor Transocean committed operational and safety violations and improperly designed the well that led to the leak, according to a four-month investigation by the regulator known as the ANP.

But the accident does not appear to have irreparably damaged the deep-sea Frade field and the mistakes did not qualify as negligence, Silvio Jablonski, a senior ANP official, told a Senate hearing on Thursday.

"Negligence is a sensitive legal term," Jablonski said. "It needs to be reserved for things that are beyond correction and improvement - and that's not the case here."

The hearing came a day after a federal prosecutor filed criminal charges against the companies and 17 of their employees. Both companies have denied the charges, which carry prison terms of up to 31 years.

The November accident "caused no discernable damage to the environment," Jablonski said, spilling 3,000 barrels at most - less than 0.1 percent of BP's 4.9-million-barrel Gulf of Mexico disaster.

Still, the stakes are huge for the companies and Brazil itself, which risks scaring away international investors and choking off an oil boom.

Chevron shares fell 2.56 percent on Thursday to $105.35. Transocean shares lost 2.87 percent.   Continued...

An aerial view is seen of oil that seeped off the coast of Rio de Janeiro, caused by a well drilled by Chevron at Frade, on the water in Campos Basin in Rio de Janeiro state November 18, 2011. REUTERS/Rogerio Santana/Handout