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EXCLUSIVE-UPDATE 1-Chevron Brazil ban overturned; company offers changes
November 30, 2012 / 10:10 PM / 5 years ago

EXCLUSIVE-UPDATE 1-Chevron Brazil ban overturned; company offers changes

* Court paves way for possible Chevron Brazil output restart
    * Companies accept "change-of-conduct accord" - prosecutor
    * Changes to safety, operating procedures follow 2011 spill

 (Adds ban overturn to main story, rewrites first five
paragraphs, adds Chevron stock price)
    By Jeb Blount
    RIO DE JANEIRO, Nov 30 (Reuters) - Chevron Corp's 
efforts to restart oil output in Brazil received a boost after a
court overturned a ban on operations and the company agreed with
prosecutors on a plan to improve  safety and operating
procedures after a November 2011 oil spill.
    The ban was overturned by appeals-court judge Guilherme
Dienthaeler of Brazil's Second Regional Federal Tribunal in Rio
de Janeiro, court press officials told Reuters Friday. Details
of the ruling are unlikely until next week, the officials said.
    Prosecutors won the injunction banning Chevron, the No. 2
U.S. oil company, and its drilling contractor Transocean Ltd. in
July. The injunction sought to assure payment of $20 billion in
damages for alleged spill-related environmental damages, in
Brazil's largest ever environmental lawsuit.
    As long as the ban held, Brazil's oil regulator, the ANP,
said it would be unable to consider a petition to restart oil
output in Frade, the field where the spill occurred. The ban
stood even though Chevron accepted a July report criticizing its
drilling plan and citations and fines of more than $16 million. 
    In a related development, Chevron and Transocean agreed to a
plan to change offshore safety and operating procedures, a
spokeswoman for federal prosecutors told Reuters on Friday.
    If a final agreement is reached after public consultations,
the plan will be presented to the Federal judge hearing the
lawsuit. That could help the companies by showing their
willingness to improve Brazil's oil industry, the prosecutors'
office in Rio de Janeiro said.
    The agreement, known as a "change-of-conduct accord", was
drafted at the companies' request with the same federal
prosecutors who are handling two civil lawsuits against Chevron
and Transocean, the prosecutors' office said.
    The office declined to give details of the accord but said
they would be presented at a public hearing on Dec. 14 in Rio de
Janeiro by federal prosecutor Gisele Porto.
    Chevron's press office in San Ramon, California confirmed
the overturn of the ban, but declined to comment further or
comment on the change-of-conduct accord.
    Transocean's press officer in Houston declined to comment.
Both companies say they committed no crime and acted correctly
during and after the spill.
    Porto is lead prosecutor on the civil lawsuits against
Chevron and Transocean, the world's largest offshore oil
drilling rig operator, for the 3,600-barrel spill in the Frade
field, northeast of Rio de Janeiro.
    No one was hurt in the Frade accident. No oil reached shore
and there was no discernable environmental damage, according to
Brazil's petroleum regulator, the ANP. 
    The Frade field was producing 62,000 barrels of oil per day
when it was shut in March to examine unexplained leaks in the
area around the site of the November 2011 spill. Tests
determined that the leaking oil was not from Chevron's
    Frade is operated by Chevron, which also owns 52 percent of
the field. Brazil's state-led Petrobras owns 30 percent, and
Frade Japão, owned by Japanese trading houses Sojitz Corp
 and Inpex Corp, has an 18 percent stake.
Neither Petrobras nor Frade Japão is the subject of
spill-related prosecutions.
    Chevron, Transocean and 17 of their employees and executives
also face criminal charges that can carry financial penalties
and jail terms of up to 31 years.
    The spill was not as severe as other recent offshore
accidents. More than 5 million barrels of oil were spilled in
the 2010 Deepwater Horizon disaster in BP Plc's Macondo
field in the Gulf of Mexico. Eleven people died in the accident
and beaches and fishing grounds were polluted. 
    On Nov. 15, BP agreed to pay a record $4.5 billion in
penalties and plead guilty to criminal misconduct for the
    While criticizing some of Chevron's actions and levying 35.1
million reais ($16.6 billion) in fines on the company, the ANP
said in a July report that there was no negligence in the 2011
spill. The ANP said Transocean had no responsibility for the
    Both companies have said they will challenge the civil and
criminal cases against them.
    Chevron shares fell 0.1 percent in New York to $105.69.

 (Reporting by Jeb Blount; editing by John Wallace and Andrew

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