A Brazilian federal prosecutor has launched his second $10.9 billion lawsuit against US oil company Chevron and driller Transocean, doubling the stakes against the companies as critics call him as overzealous.
The new lawsuit, the prosecutor’s second civil case against the companies in less than five months, is related to an oil leak discovered on March 4 in Chevron’s offshore Frade field northeast of Rio de Janeiro, the Federal Public Prosecutor’s office said in an email.
The new lawsuit, filed in federal court in Campos, north of Rio de Janeiro, also seeks to prevent Chevron and Transocean from operating in Brazil, transferring Brazilian profits overseas, obtaining government-backed finance and moving equipment from the country, the statement said.
“The second leak is as serious or more serious than the first, so the damages have to be in the same category,” Santos de Oliveira told Reuters. “While they are not a simple mathematical calculation, they are not symbolic either.”
Chevron and Transocean’s activities may have damaged the Frade reservoir, making it impossible to produce from the field, denying Brazil its right to royalties on a public resource, Santos de Oliveira, 47, said.
In November, he launched his initial $11 billion lawsuit over an estimated 3,000-barrel spill in the Frade field. Santos de Oliveira considers the spill as one of the worst-ever ecological disasters in Brazil.
Chevron’s November spill was less than 0.1 per cent of BP’s 2010 Deepwater Horizon disaster in the Gulf of Mexico. Chevron said the March leak, which led to the latest lawsuit, was about two barrels, of which less than one escaped, making it less than 0.1 per cent of Chevron’s November spill. Unlike in the Gulf of Mexico, no Chevron oil came near the coast.
“The filing of the second lawsuit is another in a series of outrageous actions brought by the same district attorney who previously filed both a criminal and civil case, all of which are without merit,” Chevron said in a statement.
The size of the damages has also caught the attention of politicians close to the government of President Dilma Rousseff. Jorge Viana, a senator from Rousseff’s Workers’ Party and one of the country’s leading environmentalists, told Reuters in March that the damages being sought are “irresponsible” and if applied to all companies working in the country could lead to the shutdown of Brazil’s oil industry.
The industry generates revenue worth more than 10 per cent of gross domestic product in Brazil, the world’s sixth-largest economy. Chevron is the No.2 US oil company by market value.
Chevron now faces about $22 billion in potential legal charges from cases launched by Santos de Oliveira alone. That’s more than the $20 billion BP set aside to pay damages and for its cleanup of its far larger spill in the Gulf of Mexico.
It is about triple the $7.8 billion BP agreed to pay a month ago to more than 100,000 people who said they were hurt by US spill. It is more than half of the $37.2 billion charge BP took against earnings on the spill.
“Look at what’s being set aside by BP in the United States and you’ll see everything you need to know about what the prosecutor is asking,” said Ildo Sauer, a professor at the University of Sao Paulo’s Electro-tenical and Energy Institute and former head of natural gas and energy at Brazil’s state-led oil company Petrobras.
“I can’t figure out where he got these numbers from or how he came up with such a figure,” said Sauer, who has a Ph.D in nuclear engineering from the Massachusetts Institute of Technology.