Exclusive: Brazil prosecutor plans wider offshore oil probe

Fri, Mar 30 18:23 PM EDT
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By Sabrina Lorenzi

RIO DE JANEIRO (Reuters) - A Brazilian federal prosecutor plans to expand his investigation of a November offshore oil spill in a field run by Chevron to areas operated by other companies in the country's main oil region.

The probe will explore geological conditions and operational practices in the Campos Basin in an attempt to prevent future accidents, said Eduardo Santos de Oliveira, federal prosecutor for Campos, Brazil, the city for which the offshore oil province is named.

The biggest operator in the Campos Basin is Petrobras, Brazil's state-led oil company, which operates 39 of the 47 producing fields in the region, according to Brazil's oil regulator, the ANP.

"Now that the working environment has been created (by the Chevron spill), let's promote this debate and use the official investigation tools to try to understand this situation, including for preventative reasons," Santos de Oliveira told Reuters.

Santos in November launched a 20-billion-real ($10.9 billion) civil-environmental lawsuit against California-based Chevron and its drilling contractor Transocean. Earlier this month he filed criminal charges against Chevron, Transocean and 17 of their employees. The crimes alleged by the criminal case carry sentences of up to 17 years in prison.

Chevron is the No. 2 U.S. oil producer.

Other companies with exploration or production operations in the Campos Basin include Anglo-Dutch Shell, Brazil's OGX Petroleo, Spain's Repsol YPF, Denmark's Maersk Oil and UK-based BP.

The Frade field, operated and 52 percent owned by Chevron, is close to some of the largest oilfields in Brazil, including Marlim Sul, Roncador and Marlim, all 100 percent owned and operated by Petrobras.

The region is known to contain sub-sea rock that is porous and prone to cracking. If not covered with a natural seal that stops oil flow, petroleum can seep through it naturally to the seabed and then bubble to the surface.

"The Campos Basin is prone to natural seeps that can stain the ocean," said Cleveland Jones, a geologist at the National Oil Institute at the State University of Rio de Janeiro. "That, in fact, is one of the reasons that geologists knew that there was a good chance of finding oil there in the first place."

Such natural seeps are even more common in the Gulf of Mexico, Jones said. Most natural spills are broken up by wave and tide action and oil-eating bacteria.

POROUS ROCK

The porous and fragile rock is believed to have been a contributing factor to the November leak in the Frade field. Chevron said oil seeped from a crack in the bore of an exploratory well and worked its way through the rock to the seabed and then ocean surface.

About 3,000 barrels leaked in the accident, less than 0.1 percent of the 4.9-million-barrel BP spill in the Gulf of Mexico in 2010. None of it reached shore and an ANP official told Congress in March that the Frade spill caused no discernible environmental damage.

Chevron and Transocean say the criminal and civil charges are excessive, they have committed no crimes and acted according to accepted industry practice.

Petrobras also has a 30 percent minority stake in Frade, while a Japanese group led by Inpex and Sojitz owns 18 percent.

Chevron, with the agreement of its partners, asked for and received permission to stop production temporarily at Frade after discovering unexplained leaks in the field in early March.

Oil leaks were also found in 2004 at Petrobras' Marlim Sul field. Marlim Sul's production of 300,000 barrels a day makes it Brazil's top-producing field.

Petrobras said studies suggested the Marlim leak probably resulted from "the existence of natural faults and fractures in the reservoir where the oil migrated to the sea floor".

Santos says the Frade accident gives his federal prosecutors office, known as the Public Ministry, a chance to fulfill its constitutional role as an independent arbiter of government and economic activity.

"Whenever you have an accident of this type, it is normal that public agents concentrate on the accident to make those responsible take responsibility," he said. "But the recent accident is also an opportunity to seek to identify what is happening with the rest (of the area)."

(Writing and additional reporting by Jeb Blount in Rio de Janeiro; Editing by Dale Hudson) ======================= Petrobras scandal shakes up Brazil's presidential race Sun, Sep 07 17:26 PM EDT image By Stephen Eisenhammer RIO DE JANEIRO (Reuters) - Brazil's October presidential race has been shaken up by a corruption scandal allegedly involving state-run oil firm Petrobras and dozens of lawmakers, with both leading candidates forced onto the defensive after colleagues were implicated. Media reported on Friday night that a jailed former Petrobras (PETR4.SA) director had named dozens of politicians who allegedly received kickbacks off the company's contracts. The revelations are a headache for President Dilma Rousseff, undermining her reputation for zero tolerance on corruption just as she is slipping in the polls ahead of the Oct. 5 election. It could also hamper opposition candidate Marina Silva. But the scandal has given third-placed Aecio Neves a fresh rallying call as he tries to claw back into the race. He is already on the offensive, branding the scandal "mensalao 2" in reference to the "mensalao," a vote-buying scheme in Congress that tainted former president Luiz Inacio Lula da Silva while he was in office. On Saturday, the magazine Veja printed the names of those implicated in the Petrobras scandal. Among them were former governor and presidential candidate Eduardo Campos, who died in a plane crash last month; the minister for energy and mines, Edison Lobão; the president of Congress' lower house, Henrique Eduardo Alves; and the Senate president, Renan Calheiros. Those allegedly involved in the scheme were said to have received a 3 percent kickback off the oil firm's contracts with third parties between 2004 and 2012. The money swapped hands in order to maintain political support between parties, Veja said. The names were given by Paulo Roberto Costa, former head of Petrobras' refining and supply unit, who was arrested in March as part of a police investigation into money laundering. Alves issued a statement denying receiving funds from Costa. Press aides for Lobão and Renan said they had no position yet on the issue, while officials at Petrobras were not immediately available for comment. Rousseff has always stressed her credentials as a no-nonsense manager, with development of Brazil's oil riches an important part of that image. She spoke to reporters in Sao Paulo on Saturday. "I assure you I will take the necessary action. But I will not act based on speculation, I want the details," she said. Expectations that the scandal would further boost Silva's candidacy are countered by the alleged involvement of Campos in the scheme. Silva, who was Campos' deputy, has spent her life campaigning against precisely the type of corruption outlined in the media reports. Support for Silva has surged in polls in recent weeks, and she is now seen winning a second-round runoff, helped by a mix of national grief over Campos' death and her promise of a new type of principled politics. "Petrobras is being destroyed through political interference, patronage and corruption," Silva told reporters in Sao Paulo on Sunday. Her deputy on the ticket, Beto Albuquerque, defended Campos and said his PSB party had asked for access to the police investigation into the alleged corruption. The one mainstream candidate not directly implicated in the scandal, Neves - currently running third in the polls - was quickly on the offensive. "There is a criminal organization operating within Petrobras," Neves said in an interview on Sunday, adding that Rousseff's Workers' Party had exploited the company to keep itself in power. "We have to end impunity in Brazil," he said. (Editing by Hugh Lawson and Paul Simao) ==================== Clean sweep needed to restore trust in Petrobras The state-controlled oil giant is mired in a corruption scandal and has seen its stock plunge over the past year. Nothing short of firing current management and appointing more independent directors will allow Petrobras, and really Brazil, to restore credibility with global markets. Jordanian MP Hind Al-Fayez: I'd Rather Set Myself on Fire than Sign Gas Deal with Israel In a recent TV interview, Jordanian MP Hind Al-Fayez said that a Jordanian-Israeli gas deal was tantamount to having "dealings with Satan." "I will use firewood or even set myself on fire, but I will never import Israeli gas," said Al-Fayez, who made headlines recently when a heated exchange in parliament went viral, bringing the issue of the Jordanian parliament's quota for women to the attention of Western media. The interview aired on the Jordanian/U.K. ANB channel on December 14.