EXCLUSIVE-UPDATE 1-Chevron, Transocean agree to change offshore Brazil procedures

Fri Nov 30, 2012 11:35pm IST

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* Companies accept "change-of-conduct accord" - prosecutor

* Changes to safety, operating procedures follow 2011 spill (Adds details, background)

By Jeb Blount

RIO DE JANEIRO, Nov 30 (Reuters) - Chevron Corp and Transocean Ltd have agreed to change offshore safety and operating procedures as part of a lawsuit seeking nearly $20 billion in damages from the companies for a November 2011 oil spill, Brazilian public prosecutors told Reuters on Friday.

The agreement, known as a "change-of-conduct accord," was drafted at the companies' request with federal prosecutors who are handling two civil lawsuits against Chevron and Transocean, the prosecutors' press office in Rio de Janeiro said.

The lawsuits are the largest-ever environmental prosecutions in Brazil. The press 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 officials were not immediately available for comment. Transocean's press officer in Houston declined to comment. Both companies say they committed no crime and acted correctly during and after the spill.

After the Dec.14 hearing and possible changes, the agreement is expected to be presented to the federal judge in Rio who is hearing the lawsuits.

Porto is lead prosecutor on the civil lawsuits against Chevron, the No. 2 U.S. oil company, 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 near the site of the November 2011 spill. 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 was 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 disaster.

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 spill.

Both companies have said they will vigorously challenge the civil and criminal cases against them. (Reporting by Jeb Blount; editing by John Wallace)

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