March 22, 2012 / 6:53 PM / 8 years ago

Key Brazil senator criticizes Chevron charges

BRASILIA (Reuters) - An influential senator from Brazilian President Dilma Rousseff’s party criticized criminal charges against Chevron (CVX.N) as “excessive” and “irresponsible” on Thursday, signalling that the government may be distancing itself from a case that threatens the future development of Brazil’s massive offshore oil reserves.

The criminal charges filed Wednesday against U.S. oil company Chevron, drill-rig operator Transocean RIGN.VX and 17 of their employees “create a climate of insecurity” that could damage badly needed investment, Senator Jorge Viana told Reuters in the capital Brasilia.

If the charges, which carry prison terms of up to 31 years, plus an $11 billion civil suit against Chevron and Transocean in November, were fairly applied to other polluters, “the industry would shut down,” said Viana.

“Brazil is entering a phase in which we need investment from all over,” said Viana, one of the most senior members of Rousseff’s Workers’ Party. He spoke ahead of Senate hearings scheduled for Thursday on the charges and the November spill in Chevron’s Frade field off the coast of Rio de Janeiro state.

The Chevron spill, which at 2,400 to 3,000 barrels amounted to less than 0.1 percent of BP’s (BP.L) 4.6-million-barrel Gulf of Mexico disaster, never reached beaches and was quickly controlled.

Rousseff, a former energy minister who sat on the board of state-run oil company Petrobras (PETR4.SA), has remained mostly silent about the Chevron case. She has warned that foreign companies in the oil sector need to respect Brazilian regulations, but has refrained from demonizing the Chevron executives or the company in public.

Rousseff sees the case “as a legal issue, not a governmental one,” a senior official told Reuters on Thursday. He spoke on condition of anonymity to be able to frankly describe her views on a sensitive matter.

The Eurasia Group, a political risk consultancy, said in a note to clients that the Chevron case “does not signal (an) anti-foreign stance within the government,” pointing out that the case was being driven by independent prosecutors instead.

However, Rousseff’s government is probably powerless to stop Brazil’s independent judiciary from proceeding with the case, the Eurasia Group said.

Still, Viana voiced concerns.

“Exaggerating the medicine here is something that hurts the whole industry,” he said. “This would even put Petrobras in a bad situation. There are national issues at stake here.”

Resolving the problem of controlling spills will require a review of legislation and regulations in order to boost the powers and capacity of key agencies such as oil regulator ANP and environmental regulator Ibama.

Oil development is risky and some spills are probably inevitable in offshore oil development, but they need to be strictly controlled by competent agencies, Viana said.

Editing and additional reporting by Brian Winter; Editing by Alden Bentley

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