Brazil to fine Chevron at least $28 mn over oil spill

Brazil slapped a $28 million fine on US energy giant Chevron Monday for an oil spill from a leaking well off Rio de Janeiro state and warned the fines could total much more. In the first of an expected slew of fines, Rio state's environment secretary Carlos Minc said Brazil's national environment agency (Ibama) was fining the US firm 50 million reals ($28 million). But he quickly added that "the (total) amount could reach $56 million." Energy Minister Edison Lobao meanwhile vowed to act "with utmost rigor" and said Chevron could expect more fines. "We will act with utmost rigor in examining (what occurred) and in the measures" we will adopt, he told a press conference after President Dilma Rousseff called a meeting of all top officials handling the case. The well, which Chevron said began leaking nearly three weeks ago, is near the Frade field located some 370 kilometers (230 miles) northeast of Rio de Janeiro, in an area that is a migratory route for whales and dolphins. Haroldo Lima, head of the National Oil Agency said Chevron was facing a series of fines that each could be worth $28 million dollars for having given false or incomplete information about the incident. Exactly how many fines will be determined by the investigation, he added. ANP accused Chevron of having released "false information" in presenting an action plan that called for the use of equipment not currently available in the country and also of having presented edited pictures on the damage, according to Lima. Meanwhile Environment Minister Izabella Teixeira also said more fines would be imposed if environmental violations were proven. Earlier Monday, Minc told reporters Rio de Janeiro state plans to impose its own fine "that could be as high as 30 million reals" as well as additional fines of more than 20 million reals for the damage caused. Chevron could also be barred from taking part in exploration tenders for five years, he added.  "There will be no impunity in Rio" with respect to environmental offenses, he added. Ibama said between 5,000 and 8,000 barrels of oil spilled into the ocean, while Chevron puts the figure at around 2,400 barrels. Accusing the US energy company of "negligence", Minc said "they under-estimated the excessive oil pressure near a crack... This accident could have been avoided." Minc said Chevron also failed to contain the leak. Chevron's Brazil country manager George Buck said the company "takes full responsibility for this incident." Among key reasons, he cited underestimating the reservoir pressure and the fact that somehow "the oil migrated through 567 meters of rock to the seabed and escaped to the sea." "The primary source deep in the earth has been stopped and the first cement plug has been set," Buck added. "What we are seeing today is residual oil slowly coming to surface. Every day the amount gets smaller and smaller." Chevron said the sheen, estimated at roughly 18 barrels or less in volume, was located about 120 kilometers off Brazil and moving away from the coast. Buck had insisted the leak was fully contained on November 13, but noted that the incident was still being investigated. According to Chevron, the slick reached a volume of 882 barrels of oil at its worst, a week ago Monday, and dropped to 18 barrels on Friday. It estimated that between 200 and 330 barrels of oil a day have seeped into the sea since November 8. The energy ministry, for its part, said 220 to 230 barrels of oil were seeping into the ocean daily. Those estimates were contested by Greenpeace, which said satellite pictures showed a spill "10 times bigger," and likely reached closer to 3,700 barrels a day. The recently appointed US special envoy for international energy affairs, Carlos Pascual, expressed Washington's "great concern" over the incident, especially in the wake of last year's BP oil disaster in the Gulf of Mexico.