Brazil Bars Oil Workers From Leaving After Spill

Story by NY Times
Written by Simon Romero

RIO DE JANEIRO — A Brazilian court has ordered 17 employees from two American companies, the oil giant Chevron and the rig operator Transocean, to surrender their passports, barring them from leaving Brazil as authorities prepare to file criminal charges in coming days in connection with an offshore oil spill involving the companies.

The ruling by Judge Vlamir Costa Magalhães, issued late Friday night, adds to Chevron’s woes in Brazil, which began in November when oil was found to be leaking from an offshore field controlled by Chevron. Prosecutors have already filed a civil lawsuit seeking damages of 20 billion reais, or about $11.2 billion, from the company. 

Brazil’s Navy and Chevron said Friday that they had detected a new sheen of oil from the same field where the earlier spill occurred. 

Chevron’s legal battle here points to the high stakes involved in Brazil’s plans to tap its huge offshore oil fields. If Brazil meets its ambitious production targets, by the 2020s, the country may rank among the world’s largest oil producers, with output rivaling or surpassing traditional oil powers like Iran or Venezuela. 

But achieving those goals requires companies to drill in immensely challenging offshore conditions. Pointing to the example of BP’s 2010 oil spill in the Gulf of Mexico, environmental officials here say that stiff penalties are needed against Chevron in order to pressure it and other companies to adopt strict procedures for preventing and dealing with spills. 

Chevron, the foreign oil company with the largest operations in Brazil, has argued that the country’s response to the November spill, which was a tiny fraction of the size of the 2010 BP spill, was an “overreaction.”

“I’ve never seen a spill this small with this size of reaction,” Ali Moshiri, the head of Chevron’s Latin America operations, told the Wall Street Journal in late 2011. 

Such comments did not seem to sit well in Brazil. Authorities accused Chevron of lying about the scope of the November spill. And the news media lambasted George Buck, the head of Chevron’s Brazil operations, after he and Mr. Moshiri were summoned to Brazil’s Congress to discuss the spill, questioning why Mr. Buck relied on a translator instead of speaking Portuguese. 

Now Mr. Buck, an American, is barred from leaving Brazil and a lengthy legal battle awaits him and other employees at Chevron and Transocean. 

Judge Magalhães issued his ruling preventing the departure of the 17 Chevron and Transocean employees at the request of a federal prosecutor. “There is no doubt the exit of these people from the country, at this moment, would generate considerable risk to the investigation,” the judge said. 

Prosecutors said the criminal charges for environmental crimes could result in prison terms of 20 years for each defendant. 

Kurt Glaubitz, a Chevron spokesman, said in a statement that “any legal decision will be abided by the company and its employees.” 

“We will defend the company and its employees,” he said. Mr. Moshiri, the top Chevron executive for the region, was unavailable for comment. 

Guy Cantwell, a spokesman for Transocean, the operator of the rig at the offshore field controlled by Chevron, declined to comment. 

As the two companies prepare to respond to the possible criminal charges over the November spill, prosecutors said Chevron and Transocean may also face charges in relation to the new seep found Friday in the field, called Frade. That seep resulted in a sheen extending over a distance of 1 kilometer, or less than half a mile. 

Chevron said it had halted output at Frade, which has the capacity to produce 80,000 barrels a day, while the company captures the oil in containment devices. According to estimates provided by Chevron, the seepage released much smaller amounts of oil than the 3,000 barrels that leaked from sea-floor cracks at the field in November. 

Nevertheless, the latest seepage points to the technical challenges of producing oil in Brazilian waters. Big oil reserves lie under about 4 miles of sea, rock and salt deposits. In 2011 alone, Petrobras, the state-controlled oil company which dominates Brazil’s energy industry, had 66 leaks of oil in its operations, releasing 234,000 liters of oil, according to a report by the newspaper Folha de São Paulo. 

“We cannot allow one leak, no matter how small,” said Maria das Graças Foster, Petrobras’s chief executive, in an interview here this month. Ms. Foster said she had created a special working group within her office that will report to her directly about leaks or spills of any volume. “We are working to have zero leaks, none at all."

The scrutiny over offshore oil leakages and Chevron’s handling of its November spill is also unfolding alongside other politicized debates.

Brazil remains more open to foreign oil companies than some oil-producing countries like Mexico or Saudi Arabia, and Chevron and other international oil companies have gained a foothold here. But Brazil has also asserted greater state control over its oil industry by ensuring that Petrobras oversees and gets a dominant role in new exploration areas

Elected officials throughout Brazil are also engaged in a contentious discussion over the distribution of oil royalties. As Brazil boosts its production, the state of Rio de Janeiro, where the bulk of the nation’s energy industry is based, is trying to maintain a big share of the royalties.

Rio stands to lose billions in revenue if the royalties are more equally distributed among Brazil’s 26 states.

“This accident is proof that producing states should receive a bigger share of the royalties,” Sergio Cabral, Rio’s governor, recently said in reference to the Chevron spill, arguing that a portion of the royalties would be used for spill prevention and cleanup efforts.