Chevron, Transocean say Brazil drops criminal oil spill charges

Wed Feb 20, 2013 7:54pm EST
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By Jeb Blount

RIO DE JANEIRO (Reuters) - A Brazilian judge dropped criminal charges against Chevron Corp, Transocean Ltd and 17 of their employees related to a November 2011 offshore oil spill, the companies said on Wednesday.

The criminal case, and a civil suit seeking as much as 40 billion reais ($20.4 billion) in damages, have cast a chill over Brazil's oil industry.

The criminal suit carried penalties of up to 31 years. The still-open civil case is Brazil's largest-ever environmental lawsuit, even though the amount of oil spilled was much less than other recent spills in Brazil and abroad.

Brazilian oil output fell in 2012, and shutting Chevron operations in the South American country contributed to the decline. Investor interest was already waning in the face of regulatory changes and a bitter dispute over royalties that have blocked the sale of new exploration licenses for four years.

"Chevron has been tied up for more than a year over a spill that caused no real damage," said Adriano Pires, head of the Brazil Infrastructure Institute, a Rio de Janeiro energy think-tank. "It's impossible to understand how a country that wants to attract investment would have taken so long to dismiss the case against Chevron."

He said failure to resolve the legal actions related to the spill will make it hard for Brazil to attract investment for three oil and gas rights auctions planned for later this year.

With criminal charges dismissed, industry watchers will focus on the civil case and Chevron administrative efforts to restart output in the Frade field, where the spill occurred in November and all output was stopped in March.

In December, Chevron and Brazilian prosecutors said they were near a settlement in the civil case and that Chevron was ready to pay 311 million reais ($159 million) to compensate for damages caused by the spill, less than 1 percent of the amount initially sought.   Continued...

Gas prices are displayed at a Chevron gas station in Los Angeles, California October 9, 2012. REUTERS/Mario Anzuoni