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Brazil sues Chevron, Transocean for $10.7 bn over oil spill news
15 December 2011

The Brazilian government has sued US oil giant Chevron Corp and Switzerland's offshore oil rig operator Transocean Ltd for 20 billion reais ($10.7 billion) for causing an oil spill off the coast of Rio de Janeiro, last month.

The civil suit filed yesterday by Brazil's federal prosecutor in Rio de Janeiro also seeks to suspend the companies from operating in the country.

Brazil's oil and gas regulator National Oil Agency (ANP) last month fined Chevron $27.6 million and temporarily suspended all its drilling activities in the country, after the San Ramon, California-based oil major admitted it caused the spill in the Frade field in the oil-rich Campos basin in deep Atlantic waters off the coast of Rio de Janeiro state. (See: Brazil suspends Chevron's drilling, fines $27.6 million for causing oil spill)

Although the oil leak has since been capped, ANP had also threatened to impose two additional fines of $28 million each on Chevron for releasing "false information" and for not having adequate equipment to contain the spill.

The federal prosecutor also found that Chevron and Transocean "weren't able to control the damage caused by the spill of nearly 3,000 barrels of oil, which shows a lack of planning and environmental management by the companies," according to a statement posted on the prosecutor's website.

Chevron and Transocean said that they were not aware of the lawsuit and did not respond to requests from news agencies to comment on it.

The spill was first detected on 7 November after a 400-meter-long (1,312-foot-long) pipeline developed a fracture releasing, according to Chevron, about 2,400 barrels of oil into the ocean before it was able to rectify the problem.

Brazilian regulators, however, dispute these claims and allege that an nearly 3,000 barrels had been estimated  to have been spilled into the ocean.
Chevron claims that the leak was caused when workers encountered unexpected pressure drilling a well in the Campos basin, and tensions escalated after the Brazilian government accused the company of misleading authorities over the incident.

Chevron is the operator of the Frade field project holding a 51.74-per cent stake, Petrobras holds 30 per cent and Frade Japao Petroleo Ltda, a joint venture including Inpex Corp and Sojitz Corp, holds 18.26 per cent.

Brazilian authorities say that despite the massive Gulf of Mexico disaster, oil companies have not equipped themselves to contain an oil spill. ANP had earlier said that Chevron was ill-equipped and ill-prepared to contain the spill.

But Carlos Minc, the environment minister for Rio de Janeiro state, had said that Brazil's laws ''allow foreign companies to explore in our waters, we welcome anyone as long as they respect our laws. We are not a banana republic. If a company violates Brazilian law and the concession terms they should go to jail and lose all their exploration rights. We want to be treated with the dignity we deserve as the world's seventh-largest economy.''

The lawsuit adds to the legal tangle already faced by both the companies. An Ecuadorian court in February ordered Chevron to pay $18 billion in damages for polluting the Amazon region decades ago by Texaco, a company it later acquired.

Chevron has since filed an appeal in Ecuador, while Vernier, Switzerland-based Transocean was operator of the rig in the Deepwater Horizon spill in the Gulf of Mexico last year.

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Brazil sues Chevron, Transocean for $10.7 bn over oil spill