Brazil’s attack on Chevron is a dangerous error
A truly bizarre international incident has gone largely unnoticed, even though it is one of the most shameless shakedowns of an American company by another country in recent memory. What is happening now in Brazil could easily scare off U.S. companies that may be looking to do business overseas.
What happened was that a small amount of oil seeped from cracks in the ocean floor near an oil well that was operated by Chevron off Brazil’s coast. This oil seep occurred some 200 miles offshore, was successfully stopped in four days, has been fully contained, and caused no harm to the environment, wildlife or human health. The amount of oil that leaked from the cracks in the ocean floor was less than 0.1 percent the size of the BP spill in the Gulf of Mexico.
Instead of sitting down with Chevron in candid talks to find preventive measures against future incidents, discuss reasonable reparations and additional cleanup, Brazil’s prosecutors went after Chevron like a rabid hound lunging after a hotdog.
After oil bubbled up from the ocean floor, Brazil’s prosecutors issued indictments seeking criminal charges, actual jail time for several company executives and fines large enough to fuel the economies of most Central American nations. Even more egregious is the fact that in 2010 Brazil’s own state-run oil company, Petrobras, spilled almost double the amount Chevron did in this incident and no one from Brazil’s oil company is facing charges or jail time.
When President Obama visited Brazil late last year, he promoted the partnership between America and the South American nation, saying: “We want to work with you. We want to help with technology and support to develop these oil reserves safely, and when you’re ready to start selling, we want to be one of your best customers.”
Brazil is an emerging South American economy. The country will assuredly receive international attention as it readies to host both the Olympics and the World Cup. Even more confusing is the fact that Chevron has been a trusted business partner of Brazil for decades. Why would Brazil’s leaders embarrass themselves by mistreating an established business partner and jeopardize their nation’s own economic prosperity?
Perhaps an overzealous prosecutor sees potential political fame or greedy government bureaucrats see an opportunity to cash in against a multibillion-dollar energy company. Whatever the reason, it’s clear that Brazilian officials have made a large and embarrassing miscalculation. What could have been a resolvable, relatively minor environmental incident has progressed into unfavorable media attention and criticism that could chill investment from companies seeking to do business overseas.
Fortunately, voices of reason are emerging. A well-known state senator in Brazil now publicly labels the charges against Chevron excessive and potentially damaging to Brazil’s energy industry. A Brazilian oil regulator recently said the spill was not the result of “negligence.” There is also talk of changing the court of jurisdiction for the trial, which would place a more reasonable prosecutor in charge. All are good signs.
Brazil’s leaders should quietly back off and tone down their rhetoric and the unwarranted punitive measures they are seeking against Chevron. Unless steps are taken now to pull back this greedy overreach, the country could cause permanent damage to its international reputation over a minor environmental mishap off its shores.
PHOTO: An aerial view of oil that seeped off the coast of Rio de Janeiro, caused by a well drilled by Chevron at Frade, on the water in Campos Basin in Rio de Janeiro state, November 18, 2011. REUTERS/Rogerio Santana