Brazil Gives Red Light to Chevron and Transocean

Stemming from the early November oil spill of Chevron and Transocean’s offshore Brazil operations, the country has struck down on the companies with a lawsuit looking to claim upwards of US $11 billion in damages and to indefinitely shut down all their activities in Brazilian territory. 

The news of the lawsuit broke this week from a federal prosecutor’s office in Campos of Rio de Janeiro, and asserts that the $11 billion (20 billion Brazilian reais) are for alleged environmental damages.  The suit also calls for a court injunction that will halt all Chevron and Transocean operations in Brazil while the case continues.

The Brazilian prosecutor stated that during an investigation of the spill, the attorney general’s office found that Chevron and drilling contractor, Transocean, were not capable of controlling the damage inflicted by the near 3,000 barrel oil spill, and failed to provide proof of environmental planning and management from the companies. 

In light of the news, a business analyst from Pickering, Holt & Co.’s global integrated oil research department, Robert Kessler, says that the huge lawsuit has the potential to scare away foreign capital needed to help further develop Brazil’s massive offshore oil deposits, adding that such a fine would be a low risk to reward ratio for companies looking to invest in the Brazil oil business. 

Chevron said they hadn’t received any notice of the legal action and that Brazilian oil regulators never contacted them about the issue regarding the Frade oil field spill.  Transocean also said that they had not received any notice of the action either, and continue to operate their rigs in Brazilian waters.

 

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