Chevron Signs Brazil Oil Spill Accord, May End Lawsuits

Published Sep 16, 2013 9:22 AM by The Maritime Executive

The sheen pictured above was greatly reduced to less than three barrels.

Chevron Corp, the No. 2 U.S. oil company, signed an accord on Friday that could lead to the end of civil lawsuits seeking $17.5 billion in damages for a November 2011 oil spill, the company's lawyer in Brazil, Oscar Couto, said.

The agreement includes about 300 million reais ($130 million) in compensatory actions for the 3,600 barrel spill, in the ocean northeast of Rio de Janeiro. Of the total, 95 million reais are for social and environmental projects unrelated to Chevron's own operations, the company said.

"With the signature of the accord, which commits Chevron to unprecedented measures to prevent new incidents and compensations for the spill in the Frade Field, the two lawsuits could be resolved," the prosecutor's office said.

The lawsuits are the largest environmental action in Brazilian history. The spill did no discernable ecological damage, never came close to Brazil's coast and injured no one, the country's petroleum regulator said in a 2012 report.

Criminal charges were dropped in February.

Chevron executives were not immediately available for comment.

Transocean Ltd, which was Chevron's drilling contractor at Frade at the time of the spill, also signed the accord but is not involved in the settlement. Chevron said in late 2012 that it would take full responsibility for the accident. If the lawsuits are dismissed, Transocean will be freed from the potential penalties.

The agreement, also signed by environmental protection agency Ibama and oil regulator ANP, will monitor Chevron's performance in the future, Gisele Porto, the prosecutor responsible for the case, said.

"It is all so much easier when the company in question comes to you and says they want to work things out; that's what Chevron did," she said. "Otherwise this case could have dragged out over years."

Chevron now expects that a judge will dismiss the lawsuits, said Rafael Jaen Williamson, a Chevron spokesman.