Chevron to pay $41.7 mn to settle oil spill lawsuits in Brazil

US oil giant Chevron Corp and Switzerland's drill-rig operator Transocean Ltd settled two lawsuits with Brazilian prosecutors over an oil spill in 2011 off the coast of Rio de Janeiro.

Chevron agreed to pay $41.7 million in compensation to cover a drilling accident at the deepwater Frade field that caused an estimated 2,400 to 3,700 barrels of oil to spill into the Atlantic Ocean.

The settlement amount is a fraction of the $20 billion initially sought by Brazilian prosecutors, who had threatened to throw the US oil giant out of the country.

The lawsuits were the largest environmental action in Brazilian history. The spill came just a year after the Deepwater Horizon blowout in the Gulf of Mexico, which led to 4.9 million barrels spilling into the sea and created an environment nightmare.

A criminal suit against the companies for environmental crimes and damage to the national patrimony was dismissed in February, and criminal charges filed against Chevron executives are dropped as part of the settlement.

The Frade field spill was first detected on 7 November 2011 after a 400-meter-long pipeline developed a fracture releasing about 3,000 barrels of oil into the ocean before Chevron was able to stop the leak.

Chevron claims that the leak was caused when workers encountered unexpected pressure drilling a well in the Campos basin, and tensions had 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, Brazil state-owned Petrobras holds 30 per cent and Frade Japao Petroleo Ltda, a joint venture including Inpex Corp and Sojitz Corp, holds the remaining 18.26 per cent.