Brazil official sees $28 million fine for Chevron

November 21, 2011 - 11:40 AM
Brazil Oil Spill

This photo taken Nov. 18, 2011 and released by Rio de Janeiro's government, shows an aerial view of vessels in the clean up of an oil spill in an offshore field operated by Chevron at the Bacia de Campos, in Rio de Janeiro state, Brazil. Rio de Janeiro state's environment secretary, Carlos Minc, says Brazil is expected to fine Chevron nearly $28 million for the ongoing offshore oil spill and will also ask Chevron to pay for damages caused by the Atlantic spill. Minc said Monday he considers the fine way too lenient, but it's the maximum allowed under current Brazilian law. (AP Photo/Rio de Janeiro's government,Rogerio Santana)

SAO PAULO (AP) — Brazil is expected to fine Chevron nearly $28 million for an ongoing offshore oil spill, Rio de Janeiro state's environment secretary said Monday.

Carlos Minc said the national government will also ask Chevron to pay for damages caused by the Atlantic spill.

"We believe the accident could've been avoided. There was an environmental crime," Minc told Globo TV and other Brazilian media. "They hid information and their emergency team took almost 10 days to start acting."

Chevron Corp. officials have accepted responsibility for the spill but reject accusations they did not notify local authorities quickly enough or properly manage cleanup operations.

Minc said he considers the fine lenient, but it's the maximum allowed under current Brazilian law.

The fine has not been officially announced because the government was still waiting for a final report by local investigators.

Minc said officials would also analyze imposing further fines on Chevron based on state laws in Rio de Janeiro, and that Brazil's National Petroleum Agency could even consider banning the company from operating in Brazil for a limited time.

"There was negligence," Minc said. "Rio will not allow any kind of environmental impunity."

He said Chevron, based in San Ramon, California, will be expected to pay about $5.6 million in reparation for the damage to the environment.

"We are still calculating the costs," he said. "Part of that money we want to use to increase the monitoring of our ocean."

Brazilian President Dilma Rousseff was expected to meet with the national environmental minister and its mines and energy minister later Monday to discuss the oil spill and determine the government's actions.

The National Petroleum Agency said more than 110,000 gallons (416,300 liters) of crude oil may have reached the ocean floor since the lead began on Nov 7.

George Buck, chief operating officer for Chevron's Brazilian division, said Sunday the spill occurred because Chevron underestimated the pressure in an underwater reservoir.

Chevron was drilling an appraisal well about 230 miles (370 kilometers) off the northeastern coast of Rio de Janeiro when the leak started as crude rushed upward and eventually escape into the surrounding seabed.

The oil has leaked through at least seven narrow fissures, all within 160 feet (50 meters) of the well head on the ocean floor.

Eighteen boats work on a rotating basis on the slick, with a varying number of vessels working simultaneously, Buck said.

The leak is a test for Brazil as huge offshore oil finds have been announced recently, with estimates they could hold at least 50 billion barrels of oil.

Brazil has had bigger oil spills. In 2000, crude spewed from a broken pipeline at the Reduc refinery in Rio de Janeiro's scenic Guanabara Bay, dumping at least 344,400 gallons (1.3 million liters) into the water. Just a few months later, more than 1 million gallons (3.8 million liters) of crude burst from a pipeline operated by state-controlled oil company Petrobras into a river in southern Brazil.

Brazil's worst oil disaster was in 1975, when an oil tanker from Iraq dumped more than 8 million gallons of crude into the bay and caused Rio's famous beaches to be closed for nearly three weeks.

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