Brazil Oil Workers Union Ponders Next Move In Oil-Spill Case

Brazil Oil Workers Union Ponders Next Move In Oil-Spill Case

RIO DE JANEIRO - The union representing oil workers in Brazil is poring over a judge's decision dismissing the union's lawsuit against U.S. oil major Chevron Corp. and rig operator Transocean Ltd. for the companies' roles in a November oil spill, a union official told Dow Jones Newswires on Tuesday.

"We're evaluating [the decision] to see what steps we are going to take next," Joao Antonio de Moraes, coordinator of the Federacao Unica dos Petroleiros union, said in a telephone interview. FUP is an umbrella union comprised of 13 separate oil-industry unions across Brazil.

A federal court judge dismissed the case without ruling on its merits because similar lawsuits have already been filed against the companies by a federal prosecutor, according to court documents released Monday. An appeal of the ruling was one of the options under consideration, Moraes said.

A federal prosecutor, Eduardo Santos de Oliveira, filed a civil lawsuit in December seeking 20 billion Brazilian reais ($10.4 billion) in damages for the spill. A second lawsuit, also seeking BRL20 billion in damages, was filed after more oil started seeping at the offshore Frade field in March. Oliveira also charged Chevron, Transocean, 16 employees of the two companies and one employee of local firm Contecon with environmental crimes related to the spill.

The FUP lawsuit did not seek any economic penalties but asked the government to rescind the concession contract granted to Chevron to operate the Frade field in the Campos Basin, where more than 90% of Brazil's crude oil is produced. A drilling accident in November caused an estimated 2,400 to 3,000 barrels of crude to seep into the Atlantic Ocean from cracks in the seabed.

"Chevron Brasil believes the lawsuit lacked merit," the company said in an emailed statement late Wednesday. "Chevron has collaborated transparently and completely with all the appropriate Brazilian government authorities," the company added.

Transocean also said it welcomed dismissal of the FUP lawsuit. "Since its filing, we questioned the legitimacy of the union's lawsuit much like the other two cases brought forward by prosecutor Eduardo Santos de Oliveira," Transocean said in a statement. "The cases were filled with errors about Transocean and its role."

In addition to the civil lawsuits and criminal action, Chevron also faces hefty fines from regulators. Brazil's National Petroleum Agency, or ANP, also suspended Chevron's drilling rights in the country. Production at Frade has been halted while Chevron and its partners in the field study the area's complicated geology.

Chevron operates the field with a 51.7% stake, while Brazilian state-run oil company Petroleo Brasileiro, or Petrobras, holds a 30% share. The remaining stake is held by the Frade Japao Petroleo Ltda. consortium.

Copyright (c) 2012 Dow Jones & Company, Inc.


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