Chevron To Analyze Brazil Oil-Spill Charges
03/21/2012| 06:59pm US/Eastern
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--Federal prosecutor in Brazil filed charges against Chevron, Transocean and 17 executives
--Chevron calls criminal charges "outrageous"
--Chevron says no evidence of negligence
(Updates with Chevron questioning competence of judge in paragraph 7, and studies showing November and March leaks unrelated in paragraph 10)
Chevron Corp. (>> Chevron Corporation) on Wednesday responded sharply to the criminal charges filed against it and some of its executives in Brazil, saying the company has become a "scapegoat" in a broader dispute over the country's oil wealth.
Chevron, the second-largest U.S. oil company by market value after Exxon Mobil Corp. (XOM), said in prepared remarks that the charges "were outrageous and without merit" and that it plans to defend itself and its employees vigorously.
A federal prosecutor in Brazil Wednesday filed charges against Chevron, drilling-rig operator Transocean Ltd. (>> Transocean LTD) and 17 executives, accusing them of environmental crimes related to an offshore oil spill in November, in which an estimated 2,400 to 3,000 barrels of oil seeped from the seabed at a well in Chevron's Frade field.
The prosecutor, Eduardo Santos de Oliveira, asked for the assets of Chevron and Transocean and 17 employees to be seized, and has asked that the companies each post a bond of 10 million Brazilian reais ($5.5 million) and each employee a bond of BRL1 million until the case is concluded, a statement from the prosecutor said.
The president of Chevron's Brazil operations, George Buck, and three other Chevron employees have also been charged with other crimes, including obstructing the investigation, the statement said. If found guilty, Buck faces up to 31 years in jail, according to the statement.
The charges were filed with a federal court in the city of Campos, in Rio de Janeiro state, the statement said.
A lawyer for Chevron, Nilo Batista, said the company will study the prosecutor's charges, adding it is questioning the competence of the Campos judge to rule on the issues at stake.
Another company lawyer, Oscar Graca Couto, said there had been no measurable environmental impact from the oil spill. "Not even one sardine perished," Graca Couto told reporters at a news conference in Rio de Janeiro.
He said it is "incomprehensible" how Brazil's public ministry has proposed fining Chevron BRL20 billion for the incident.
"We are very confident that the facts will speak for themselves," he said. The company has also commissioned four studies by independent laboratories that show that oil from a second leak at Frade this month wasn't linked to oil from the field's main reservoir, or to the company's leak at the field in November, the lawyers said.
In a statement, the company said there is "no technical or factual evidence demonstrating any willful or negligent conduct by Chevron or its employees associated with the incident." The company said it has sought to operate in compliance with Brazilian laws and industry practices.
Batista also questioned the jurisdiction of the Brazilian courts, saying that the accident happened outside Brazilian territorial waters.
Chevron has become a scapegoat in a dispute among Brazilian states about how to distribute the wealth from massive oil fields discovered off the country's south-east coast, the lawyer said. Later, he said, the Brazilian reaction to the oil spill was "turning into a witch-hunt," possibly involving antiforeigner sentiments.
Chevron has never considered leaving Brazil, Batista added.
On Friday, a Brazilian judge had barred a group of 17 executives and employees of Chevron and Transocean from leaving the country. Batista said the order to seize their passports was "unjustified."
-By Diana Kinch and Matthew Cowley, Dow Jones Newswires; +55 11 3544 7082; brazil@dowjones.com
--Isabel Ordonez in Houston contributed to this article.
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