Chevron and Brazil’s oil industry: Oil, water and trouble | The Economist

Publicado por Ildo Sauer em 28/12/2011 · 6 Comentários 

Chevron and Brazil’s oil industry: Oil, water and trouble | The Economist.

Chevron and Brazil’s oil industry

Oil, water and trouble

The exaggerated reaction to a small oil spill is cause for alarm, not reassurance

Dec 31st 2011 | SÃO PAULO | from the print edition

THE flow of oil from cracks in the seabed off the coast of Rio de Janeiro has long since slowed to a mere trickle. Not so the retribution against Chevron, an American oil company that was drilling in the Frade oilfield on November 7th when a sudden rise in pressure caused a leak.

Brazil’s environment agency, IBAMA, has fined the company 50m reais ($28m) for the leak. On December 23rd it levied a further 10m reais for poor contingency planning. The National Petroleum Agency (ANP), the industry regulator, has closed one of Chevron’s Frade wells and suspended the firm’s drilling rights. The Rio de Janeiro state government is suing for 150m reais. A federal prosecutor in Campos, a city in the north of the state, is demanding 20 billion reais in punitive damages and seeking an injunction to halt all operations in Brazil by both Chevron and Transocean, the subcontractor drilling for it in Frade. Federal police, meanwhile, want to bring criminal charges against bosses of both companies.

After the 4.9m-barrel spill from the Macondo well in the Gulf of Mexico in 2010, oil regulators around the world are in no mood for leniency. But the blitz against Chevron, for a leak of no more than 3,000 barrels, makes some industry-watchers wonder whether Brazil wants foreign oil companies at all. “The reactions are out of proportion with the size of the leak,” says José Goldemberg, an energy and environment specialist at the University of São Paulo. Petrobras, Brazil’s state-controlled oil giant, holds a minority stake in Frade, but none of the lawsuits or fines names it as a respondent. “I don’t think there would have been the same enthusiasm for big fines if Petrobras had been drilling.”

Brazil ended Petrobras’s monopoly and opened up its oil industry to private and foreign investment in the 1990s. But its recent oil policy has been “nationalist and populist”, says Adriano Pires, a Rio-based energy consultant and former ANP official. It has restricted foreign companies to secondary roles in most new projects. A law approved in 2010 requires that in the recently discovered ultra-deep pré-sal (“sub-salt”) fields, Petrobras must be the operator with a minimum 30% stake (existing concessions are unaffected). Mr Pires fears that Chevron’s mishandling of communications will only harden the new mood. The company was slow to make details of the accident public, he says, and arrogant when it did; press conferences in English went down particularly badly. “It gave the authorities another chance to claim that foreign oil companies drilling in Brazil act carelessly,” he laments.

Chevron does not try to defend its initial media response, but says that from a technical point of view it did everything right and that it is co-operating fully with Brazilian agencies. The blowout preventer (the gadget that failed so disastrously in Macondo) worked as designed, preventing a larger spill. None of the oil that did leak reached the shore; a successful clean-up has left less than half a barrel’s worth of oil on the surface, far out to sea. The firm has accepted full responsibility for the accident (though it will fight the criminal charges and giant lawsuits).

In fact, the lawsuits, as opposed to the fines, may have more to do with internal Brazilian politics than foreigner-bashing. The federal government wants to put much of the pré-sal royalties in a national fund and give every state and municipality a share too. But negotiations in Congress have stalled. The Frade spill has given oil-producing states and municipalities, like Rio and Campos, which currently get the lion’s share, a new argument.

That quarrel will eventually be resolved. But a pullback of foreign companies risks hurting Brazil’s prospects of becoming a new oil power. Developing the pré-sal fields requires global expertise. And oil companies everywhere rely on a few huge service providers: Transocean, for example, operates many of Brazil’s offshore platforms, including some for Petrobras.

According to David Zylbersztajn, a former ANP director, the Frade mishap shows just how unprepared Brazil is for a serious spill. He points to the unco-ordinated response of different tiers of government, the navy and oil companies. “If there is a national contingency plan, then nobody knows about it,” he says.

The federal government seems more interested in spending the money from the pré-saloil than making sure it is drilled safely, says Ildo Sauer, a former Petrobras manager. Neither IBAMA nor the ANP is qualified to oversee safety and accident prevention. IBAMA knows more about forests than oilfields and the ANP’s main focus is auctioning drilling rights. “They are all responsible,” he says. “They are demonising Chevron to absolve themselves from their own sins.”

from the print edition | The Americas

Arquivado em Diálogos, Produção e apropriação social da energia · Etiquetado com Brasil, Brazil, Chevron, economia, Energia, ildo sauer, meio ambiente, petróleo, segurança, sociedade