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.
Why the coast is key to the survival of New Orleans
The following is a guest post by Mark Davis, a senior research fellow and director of the Tulane Institute on Water Resources Law and Policy at Tulane Law School. The opinions expressed are his own.
In the wake of Hurricane Katrina and the Deepwater Horizon oil spill the importance of the ecosystems surrounding New Orleans, and their vulnerability to mankind’s manipulations and mistakes, has never been clearer. Equally clear is the fact that for New Orleans to transform itself and create a better future, the metropolitan area must enter into a new, wiser relationship with the land and water surrounding it.
The fate and fortune of New Orleans have always been, and will always be, tied to the coast. In the past, New Orleans has had a troubled relationship with its watery environs. The proximity to the Mississippi River and the Gulf made the city’s founding and its rise to prominence possible. But the risk of flooding from the river, torrential rains, and the Gulf made it a hard bargain with nature from the beginning.
The vulnerability of New Orleans to storms and rising seas has been growing for more than 100 years as the buffering coast began to erode. Because the causes of that coastal collapse are mostly traceable to economic activity such as oil and gas canals, dredging navigation canals, draining and filling wetlands for development, it was easy — indeed, it was policy — to discount the growing risks and to blindly hope somehow things wouldn’t get bad and, if they did, someone else would fix them.
Water also shaped the distinctive culture of the region. The port of New Orleans made the city one of the great points of entry for immigrants, adding a cosmopolitan flavor to the city known in only a handful of other American places. In stark contrast to the metropolis of New Orleans, the meandering bayous, bays, lakes, swamps, and marshes of the surrounding delta gave isolating refuge to Native Americans, expatriate Acadians (today’s Cajuns), runaway slaves, Vietnamese, and others, forging a network of landscape-oriented cultures that remains, at least for now.
Today, New Orleans’ recovery and prosperity are tied to reestablishing sustainability to its surrounding landscape.
from The Great Debate UK:
Steve Tappin on what makes a CEO tick
Being a CEO should be one of the best jobs in the world, argue the authors of a new book.
"It offers the chance to make a real difference," Steve Tappin and Andrew Cave write in The New Secrets of CEOs: 200 Global Chief Executives on Leading.
"However, real life for most CEOs is tough and many are not enjoying it."
The authors interviewed 200 CEOs for the book, which includes profiles of such leaders as Tesco's Terry Leahy , Avon's Andrea Jung, Xstrata's Mick Davis, Kraft's Irene Rosenfeld, Haier's Zhang Ruimin and Cisco's John Chambers.
CEOs are divided into five "distinct categories" characterised by similar leadership styles.
In the following video interview, Tappin, who heads up the CEO counselling firm Xinfu, discusses some major issues confronting top leaders at global firms since the financial crisis of 2007-2009, and shares his views with Reuters on how BP's Tony Hayward should manage the the Gulf of Mexico oil spill crisis.
BP’s crisis is no Three Mile Island
The catastrophic blowout at Macondo has sliced 40 percent off BP’s market capitalisation, and led analysts to speculate about lasting reductions in deepwater drilling and the resulting impact on both long-term oil supply and the fate of climate change legislation.
The underlying fear is that Macondo is the oil industry’s Three Mile Island, an accident that turned public opinion against nuclear power for three decades.
Investors are right to fear the long-term impact on the company. But they exaggerate the impact on the wider industry and the prospects for climate change legislation. BP however faces a very changed operating environment in future.
MARGINAL SUPPLY IMPACT
Deepwater and ultra-deepwater petroleum wells are just one of a suite of advanced technologies energy producers have been using to extend the peak in conventional oil production.
In its 2008 World Energy Outlook, the International Energy Agency (IEA) estimated worldwide deepwater and ultra-deepwater reserves at 200 billion barrels. This is relatively small compared with conventional oil reserves (2.1 trillion barrels) let alone total hydrocarbons (6.3 trillion barrels, excluding unproven methane hydrate technology) (http://graphics.thomsonreuters.com/ce/HYDROCARBONS.pdf).
Even complete loss of deepwater and ultra-deepwater oil production would have only a marginal impact on total energy supply in the decades to come.
Just wondering if there were any fines or penalties for the management or companies responsible for the “Three Mile Island” disaster. It would be great if someone has a link they could send me respecting this information. Thank you
from The Great Debate UK:
BP Gulf of Mexico crisis will transform the oil industry
-Kees Willemse is professor of off-shore engineering, Delft University. The opinions expressed are his own.-
The news that a huge metal cap has been successfully placed over several of the leaking oil vents at the Deepwater Horizon site marks a potential turning point in the Gulf of Mexico crisis.
It is already estimated that each day some 10-15,000 barrels of the oil that are spilling out into the ocean are being captured and diverted to ships on the sea surface.
Despite this engineering success, a complete end to the oil leakage is unlikely until new relief oil wells are completed -- a drilling process that could take most of the summer, and potentially into the autumn. This is because the newly installed metal cap is unlikely, even in the best case scenario, to stop all of the oil spilling out.
In advance of the completion of the relief wells, a potentially major new complicating factor is the arrival of the hurricane season last week.
The National Oceanic and Atmospheric Administration is already predicting between 8 and 14 hurricanes this season, with perhaps a similar number of smaller storms, any of which could complicate (or indeed force a postponement) of the ongoing mitigation and clean-up activities in and around Deepwater Horizon.
from The Great Debate UK:
How much damage will the BP oil spill cause?
-Kees Willemse is professor of offshore engineering at Delft University. The opinions expressed are his own.-
Last month’s explosion at the Deepwater Horizon rig continues to result in the leakage of an estimated 200,000 gallons (910,000 litres) of oil into the Gulf of Mexico each day.
According to U.S. President Barack Obama, “we are dealing with a massive and potentially unprecedented environmental disaster”.
While the leak is extremely serious, and Obama’s words may ultimately ring true, the leak is (as yet) not one of the top 50 biggest oil spillages from either oil rigs or tankers in historical perspective:
• Some 7-10,000 tonnes of oil are so far estimated to have leaked into the Gulf of Mexico from Deepwater Horizon. • The Exxon Valdez leaked some 36,000 tonnes of crude oil on the shores of Alaska. • The largest ever off-shore leakage of oil occurred in 1979 in the Ixtoc-1 spillage when an estimated 476,000 tonnes of oil polluted the Gulf of Mexico (Bay of Campeche). • The biggest ever on-shore spillage occurred in the aftermath of the 1991 Iraq War when an estimated 1.4 to 1.5 million tonnes was released in Kuwait by Iraqi military forces.
Most at risk from the Deepwater Horizon spill are the coastlines of Texas, Florida, Mississippi, Alabama, and Louisiana, including the wetlands near New Orleans where millions of migratory birds are currently nesting, and fish spawning.
The oil spill could also be catastrophic for the Gulf Coast’s substantial seafood industry, including oysters and shrimp.
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…