Chevron Offers to Pay $149 Million to Settle Brazil Oil Spill Lawsuits

RIO DE JANEIRO - U.S. oil major Chevron Corp. has offered to pay $149 million to settle two civil lawsuits in Brazil related to an oil spill in late 2011, with final approval of the deal likely in January, Brazil's federal prosecutor's office said Monday.

A settlement would close an important part of a controversial chapter in the history of Brazil's burgeoning oil industry, as the country tries to balance the dangers of offshore oil development with the benefits.

Brazil was criticized for the heavy-handed way regulators and prosecutors came after Chevron for what the industry regarded as a minor accident, with an estimated 3,700 barrels of crude dumped into the Atlantic Ocean. Huge oil reserves have been discovered off the country's southeast coast, but development is likely to be costly and complex, and the threat of such dramatic court action had worried the industry.

The deal would settle two civil lawsuits seeking more than $20 billion in damages, although a criminal case involving Chevron, drilling rig operator Transocean Ltd. and 17 executives will continue, the prosecutor's office said.

The deal can be approved if environmental regulator Ibama confirms that the oil spill did not cause any environmental damage, as Chevron has claimed, a spokesman for the prosecutor's office said.

The field has been shuttered since March, when oil started to seep a second time from cracks in the seabed. The cracks were in a different area of the Frade field than the initial November 2011 spill, when oil started to seep into the ocean after a drilling accident.

Brazil's National Petroleum Agency, or ANP, cited Chevron for 25 infractions related to the spill, with Chevron paying the agency more than $17 million in fines. Transocean was absolved of any wrongdoing by the ANP.

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


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