Chevron Fined $28 Million for Oil Spill

By: EW News Desk Team   Date: 22 November 2011

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22 November 2011

Brazil has imposed a hefty $28 million fine on Chevron for an offshore oil spill, punishing the oil company of being ill-prepared in managing the crisis.

The hefty fine comes a day after the local branch of Chevron took responsibility for the spill. Ibama, or the Brazilian Institute of the Environment and Renewable Natural Resources called the incident which began on the 7th of November an “environmental crime”.

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Chevron estimates the size of the spill to be about 2,400 barrels. While it is far smaller than the size of BP’s spill in the Gulf of Mexico last year, Brazil believes the accident could have been avoided.

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Brazilian officials have already accused Chevron of being slow to respond to the accident and giving the government inaccurate information about the number of ships mobilized to deal with the oil slick, prompting an investigation by the country's federal police. Chevron rejects those claims, saying the company stopped the source of the oil flow just four days after the spill was found.

Chevron has, however, accepted responsibility for the spill, saying it was linked to an exploratory well the company was drilling near the Frade undersea oil field, in water 3,800 feet deep.

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At a press conference, Brazil’s environmental secretary Carlos Minc said Chevron could face five or six additional fines, if investigations reveal that the company failed in the execution of its emergency plan.

"This accident was avoidable. ... It was incompetence. That is an environmental crime,” Minc told Brazil's Globo TV.

Brazil's biggest oil spill since 2000 is a threat to Chevron's credibility in the country after the company acknowledged it had caused the accident by wrongly estimating pressure and rock strength in the reservoir it was targeting.

While Chevron's current production in Brazil is relatively small, at less than 1 percent of its 2010 worldwide output, the company has invested heavily in the country's offshore fields.

In a related report, Reuters suggests that “Chevron’s oil spill off the Brazilian coast exposes the major environmental risks of tapping the country's new oil wealth and could further delay development by fueling nationalistic oil politics.”

The reality is that this spill is going to speed up the politicizing of Brazil's oil industry. We are not going to have a real discussion about the risks and benefits of offshore oil exploration, but an idiotic political discussion. The political risk is going to rise in the industry, said Cleveland Jones in a Reuters interview, a geologist with the National Oil and Gas Institute at the State University of Rio de Janeiro

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