Brazil’s attack on Chevron is a dangerous error

By Ken Blackwell
March 28, 2012

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

8 comments

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why is the author of this article seem like he is protecting chevron???? look if you mess up you will pay for it!!! stop making it seem lie people are attacking US companies. HOW CAN YOU SAY IT DID NO HARM?

Posted by earthman137 | Report as abusive

I completely agree that Brazil made a huge mistake in going after Chevron like this and that they should do everything they can to fix it. However, by the time you’ve threatened a long standing business partner’s executives with jail time over a truly negligible oil spill, I think the damage is done. The best case scenario is that other countries take note not to repeat this error.

Posted by CapitalismSays | Report as abusive

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This article is brought to you by Chevron! Chevron, processing the earth, one country at a time…

Posted by billt568 | Report as abusive

America and its international businesses have no credibility anywhere in the world outside of its own borders. Perhaps Brazil does not want a repeat, Nigerian style, of destructive practices by oil companies upon its country. In fact, Brazil seems to be leaps ahead of the US in terms of alternative fuels and growing its economy, uplifting people out of poverty rather than the American trend of impoverishing the middle class (after having written off the previous impoverished). The sad thing is, anything America now has to say is just perceived as self serving rhetoric that even Americans can no longer believe.

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I agree that Greedy government is trying to get something in name of justice, however, if Chevron throw few $$ to corrupted politics they definitely will remain silent. It’s not about Brazilian reputation, which is not the matter here to discuss, but to create something from nothing. Also Chevron must deal with this case more wisely by allowing the legal procedure takes its place whatever it costs.

Posted by r_alhames | Report as abusive

And what the US is doing to BP is the same… This article is wacko

Posted by GA_Chris | Report as abusive

Oil companies are damaging the planet for generations and when they destroy the environment they don’t want to clean up or compensate people for their mess.

In Brazil, when poor, hungry people hunt for food, they get arrested because they killed some animal or destroy plants they shouldn’t. This massive attack on the environment promoted by Chevron is essentially the same thing and those executives should be held accountable.

By the way, did you know Transocean also did the drilling in Brazil? Provided false documentation about the job among other issues?

Posted by jay_brasil | Report as abusive

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Obviously Ken Blackwell is like so many Americans who still look down on developing nations unless some profitable relationship can be ensured. They are always so self-righteous and ready to condemn, critize and then bully any country, like Brazil, who dares to exercize its sovereignty. Who are you, Mr. Blacwell, to judge the size and damage extense of the oil spill? Are you a scientist? How misleading of you to equate this oil spill as only 0.1% of the one in the Gulf of Mexico? ANY oil spill amount is detrimental to the environment. This was no small oil spill: 3,000 barrels of oil. It is sad to see how this is presented on the international media, making Chevron (the bully) as a victim of greedy bureaucrats. Chevron wants to do business in Brazil; it plays by Brazilian rules. Chevron does not like it the way it is, then it can go exploit some other dumb country…

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