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Brazil slaps another $11 billion suit on Chevron, Transocean for oil spill news
05 April 2012

The Brazilian government has filed a new $11-billion suit against US oil giant Chevron Corp and Switzerland's offshore oil rig operator Transocean Ltd for a second leak in an offshore oil field, taking the claim amount to nearly $22 billion.

Brazil's federal prosecutor Eduardo Santos de Oliveira filed the lawsuit over a second oil spill off the coast of Rio de Janeiro caused by oil that leaked from cracks on the ocean floor on 4 March.

Chevron said it had underestimated the pressure in an underwater reservoir, and crude rushed up a bore hole and eventually escaped into the surrounding seabed some 230 miles off Rio's coast.

The oil escaped through at least seven narrow fissures on the ocean floor, all within 50 meters of the well head.

The new spill is near the offshore Chevron well where at least 110,000 gallons spilled late last year and the Brazilian government had filed a suit against both companies for $10.7 billion. (See: Brazil sues Chevron, Transocean for $10.7 bn over oil spill)

Chevron committed ''a series of errors'' that led to the March spill at Frade, the second incident at the offshore oil project, the federal prosecutors' office said in a statement yesterday.

Oliveira is also seeking to suspend the companies from operating in the country and block Chevron from transferring profits from Brazil.

Chevron is the operator of the Frade field project holding a 51.74-per cent stake, Brazil's state-owned oil company Petrobras holds 30 per cent and Frade Japao Petroleo Ltda, a joint venture including Inpex Corp and Sojitz Corp, holds 18.26 per cent.
The first spill was 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 spilled into the ocean before it was able to rectify the problem.

Chevron claims that the leak was caused when workers encountered unexpected pressure drilling a well in the Campos basin.

Tensions escalated after the Brazilian government accused the company of misleading authorities over the incident.

After suing both Chevron and Transocean in December 2011, the Brazilian government filed criminal charges against both companies, and 17 of their employees for environmental crimes.

Apart from seeking 31 years prison sentence, Oliveira has asked each company to pay $5.5 million and about $549,100 from each executive for damages to the environment.

This is over and above an earlier civil lawsuit seeking 20 billion reais ($10.7 billion) in damages.

The 17 executives named by prosecutors in preliminary documents include six Americans, five Brazilians, two French and Australian nationals, one British citizen and one Canadian. They include the heads of the Brazilian subsidiaries of both Chevron and Transocean.

All the 17 executives were banned from leaving Brazil during the prosecutors' probe, but yesterday a judge permitted three employee facing criminal charges to leave the country, as the US and Brazil have a judicial extradition treaty.

Chevron has said that it will vigorously defend the company and its employees and the charges are outrageous and without merit.

Petrobras, which is liable for 30 per cent of any damages, said that the $10.7-billion claim filed last year was ''unreasonable.

It is yet to respond to the new suit.

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Brazil slaps another $11 billion suit on Chevron, Transocean for oil spill