Chevron is facing some serious headwinds in South America. This past Wednesday, a Brazilian federal prosecutor declared the U.S. oil giant failed to properly manage the aftermath of a November drilling accident and subsequent spill, which could lead to the company being barred from operating in the country.
“Chevron may never be allowed to freely operate in Brazil again,” federal prosecutor Eduardo Santos de Oliveira told reporters in the wake of the spill that allowed about 3,000 barrels of crude oil to spew into a seabed.
This most recent blemish to the brand comes on the heels of another calamity. On March 16, the Brazilian navy spotted a thin strip of oil in an offshore field called Frade, off the coast of Brazil. Seventeen top executives from Chevron and Transocean, a Swiss-based offshore drilling company, may face a criminal indictment for the alleged oil leak. Chevron has a controlling interest in Frade, as it owns 52 percent of the field and operates its production, while Transocean’s drills are used for extraction.
A federal judge in Rio de Janiero granted a request from prosecutors and it is now up to the judge involved to determine whether to accept the charges and proceed with the case. The charges are expected to be filed in the next few days. The 17 executives, led by George Buck, head of Chevron’s Brazil unit, have already been prohibited from leaving the country and were forced to turn over their passports to police.
The high-profile spill last November resulted in an $11 billion civil lawsuit, Brazil’s largest environmental decision to-date.
Production in the Frade field has been halted as Chevron tries to contain the oil, and its image, in the area. The halting is a major cause for concern for Chevron, as Frade has the capacity to produce 80,000 barrels a day, more than three percent of Brazil’s total output.
There is skepticism regarding Chevron’s involvement in the leak. According to Cleveland Jones, a geologist at UFRJ, the state university of Rio, “Until there is some further proof, there is a good chance that this leak is a natural occurrence” and “Leaks of this size are common, and are how people realized there was oil in the area in the first place.”
If Chevron is seeming like the most guilty of the perpetrators in the latest trend of oil spills, it is important to note that last November’s spill of 3,000 barrels was less than 0.1 percent of BP’s disaster in the Gulf of Mexico in 2010.
Rather than point fingers though, let’s hope it doesn’t take too many more accidents for the majority of the world, and not just Brazil, to realize the inevitability of the damage that careless oil extraction brings. -Raffi Simel
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