Chevron, Transocean managers face Brazil criminal charges

March 21 (Bloomberg) -- Seventeen Chevron Corp. and Transocean Ltd. executives were charged with environmental crimes in an oil leak off Rio de Janeiro’s coast amid prosecutor calls for damage payments and prison sentences.

The companies applied excessive pressure when drilling at Chevron’s Frade field, used faulty equipment and failed to meet requirements to avoid and counter spills, the federal prosecutor’s office said in an e-mailed statement today. George Buck, head of Chevron in Brazil, and other executives were also charged with obstructing a probe. Prosecutors asked for prison sentences of as much as 31 years for the executives.

The 3,000-barrel slick at Chevron’s $3.6 billion Frade project in November occurred at a time Brazil is increasing scrutiny of deep-water drilling following the 2010 Macondo spill in the U.S. Gulf of Mexico. Chevron was “careless” when drilling the well, Rio de Janeiro State Environment Secretary Carlos Minc said earlier today.

“All evidence shows that Chevron acted carelessly,” Minc, a former Brazilian environment minister, told reporters in Rio de Janeiro today. “It was too eager and didn’t respect agreements with regulating agencies.”

Nilo Batista, a lawyer representing Chevron, declined to comment on the case because he hasn’t received the charges yet. Batista spoke to reporters in Rio de Janeiro.

Damage Payments

Prosecutors are asking each company to pay 10 million reais ($5.5 million) and demanding 1 million reais from each executive for damage to the environment. Michael Legrand, Transocean’s head of operations in the country, is also among the 17 executives, who were banned from leaving Brazil this week while the probe led by prosecutors is conducted.

Chevron, the second-biggest U.S. oil company by market value, suspended production in Brazil last week after identifying a second leak at the Frade area.

The oil seep near Chevron’s Frade project this month didn’t come from the field where a spill occurred in November, company spokesman Kurt Glaubitz said in an e-mailed response to questions earlier.

Regulator Probe

Chevron has 15 days to respond to the Brazilian oil regulator’s report on the spill, Magda Chambriard, the head of the agency known as the ANP, said today. She said there were “no problems” with the Transocean platform used by Chevron.

ANP will complete its final report on the leak after the U.S. oil producer replies to questions and expects to take a month to study the responses, Chambriard said.

The state of Rio, where most of Brazil’s crude is produced, is proposing the country monitor fields by satellite and make producers’ geological studies public to boost transparency and scrutiny after the Chevron spill, Minc said

“Our measures are not excessive,” Minc said. “We’re not after Chevron because it’s foreign.”

Brazil applies the same rules to foreign oil companies as it does to state-controlled oil producer Petroleo Brasileiro SA, Energy Minister Edison Lobao said today in Rio. Brazil “respects contracts,” he said.

Chevron fell 0.9 percent to $108.11 in New York at 3:50 p.m. Before today, it rose 2.5 percent this year. Transocean fell 0.9 percent to $56.84.

Bloomberg News

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