Brazil judge blocks Chevron, Transocean injunction

RIO DE JANEIRO Tue Feb 28, 2012 9:30pm EST

A Chevron gas pump is shown at a Chevron gas station in Encinitas, California April 28, 2011. REUTERS/Mike Blake

A Chevron gas pump is shown at a Chevron gas station in Encinitas, California April 28, 2011.

Credit: Reuters/Mike Blake

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RIO DE JANEIRO (Reuters) - A federal judge in Brazil declined to grant an injunction suspending the Brazilian operations of oil major Chevron and offshore oil-rig contractor Transocean over a November oil spill northeast of Rio de Janeiro, providing temporary relief to the two companies.

The injunction was requested by Brazilian federal prosecutor Eduardo Santos de Oliveira as part of his 20 billion real ($11.8 billion) civil lawsuit against Chevron, the field's majority-owner and operator, and Transocean, its drilling contractor.

The rejection of the injunction does not limit or block the civil lawsuit or a criminal case against Chevron Corp (CVX.N), the No. 2 U.S. oil company, and Transocean Ltd (RIGN.VX), the world's No. 1 offshore drilling contractor, over the oil spill, court documents released on Tuesday showed.

San Ramon, California-based Chevron, which operates the largest foreign-led oil field in Brazil, has already been fined more than $50 million for the spill. Switzerland-based Transocean has 10 rigs working in Brazil for companies such as Brazil's Petrobras (PETR4.SA), Chevron and India's ONGC (ONGC.NS).

The injunction was denied because prosecutors did not show that suspending Chevron and Transocean operations in Brazil would help get the companies to pay for alleged environmental damage, Raffaele Felice Pirro, a federal judge with a court in Rio de Janeiro, said in his decision.

The injunction could be seen as an attempt to punish the companies without a trial, and to do that without giving them a chance to defend themselves, Pirro wrote.

"We do not discuss the seriousness of the oil spill nor the probable catastrophic consequences that come from the accident," the judge wrote.

"The supposed responsibility of the defendants will be shown in the proceedings under the guidance of a magistrate, by means of investigation and with the possibility of all parties to manifest their participation in this sad incident."

Santos, the author of the injunction request, heads up the Federal Prosecutors' office in Campos de Goitacazes, Brazil, a city north of Rio de Janeiro and the principal municipality in Brazil's main oil-producing region.

Chevron said in a statement it had not received notification from the court of the ruling, but reiterated that its response to the spill followed the law and industry standards. "Continuous monitoring of the incident area shows no discernible environmental impact to marine life or human health," it added.

Transocean said in a statement: "We welcome the judge's decision to deny an injunction and we continue to cooperate with the authorities."

NO DEATHS

The 2,400- to 3,000-barrel spill occurred in the Frade field in Brazil's Campos basin, an offshore area owned 52 percent by Chevron and operated by it. The Campos basin is home to more than 80 percent of Brazil's oil output.

The Frade spill was less than 0.1 percent the size of the spill in the deadly Deepwater Horizon disaster in the U.S. Gulf of Mexico in 2010. That accident killed 11 and fouled beaches along the southern U.S. coast.

Transocean was the owner of the Deepwater Horizon drilling rig; the Macondo well was operated by BP (BP.L), which owned 65 percent of the well.

No one was killed at Frade and no oil reached the shore, leading some to suggest that the damages sought by Santos are excessive.

Petrobras owns 30 percent of Frade, and Frade Japan, a group controlled by Japan's Inpex (1605.T), owns 18 percent.

Chevron shares ended little changed in U.S. trading on Tuesday, while Transocean shares gained 1.8 percent in Switzerland.

(Additional reporting by Braden Reddall in San Francisco; Editing by John Wallace, Phil Berlowitz and Muralikumar Anantharaman)

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