UPDATE 1-Chevron executives barred from leaving Brazil over spill

Sat Mar 17, 2012 9:05pm EDT

Related Topics

* Chevron halts output after navy spots oil stains

* Regulator ANP allows Chevron to stop production

* Spill in November led to $11.1 billion civil suit (Recasts to add court decision, production halt)

By Guillermo Parra-Bernal and Jeb Blount

SAO PAULO/RIO DE JANEIRO, March 17 (Reuters) - A Brazilian court on Saturday barred 17 executives from Chevron and Transocean from leaving Brazil, pending criminal charges related to a high-profile oil spill last November.

A federal judge in Rio de Janeiro state granted a request from prosecutors who are pressing for charges against both firms, a spokesman for prosecutor Eduardo Oliveira said in a phone interview. George Buck, who heads Chevron's Brazil unit, and the other 16 executives must turn in their passports to the police within 24 hours, the spokesman said.

Charges are expected to be filed on Tuesday or Wednesday, according to the prosecutors' press office.

The court decision came a day after the Brazilian navy spotted a thin stain of oil extending for about 0.6 mile (1 km) in offshore field Frade, which was also the site of last year's spill. U.S.-based Chevron said in a statement it halted production at Frade on Saturday after winning permission from Brazilian oil industry regulator ANP.

Neither Chevron nor any of its executives "have been formally notified of any action by the judiciary yet," the company statement said. "Any legal decision will be abided by the company and its employees. We will defend the company and its employees."

Prosecutors want to press a criminal indictment of Buck and other executives from Chevron and Swiss-based offshore drilling company Transocean, three government sources told Reuters in January. Transocean's rig was used in the Frade field.

It is up to a judge to determine whether to accept the charges and proceed with indictments.

Chevron's spill in November leaked as many as 3,000 barrels from sea-floor cracks. It resulted in an $11 billion civil lawsuit, the largest environmental damages case in Brazil's history, although the total amount of oil was less than 0.1 percent of the BP spill in 2010 in the Gulf of Mexico.

Chevron's troubles in Brazil could force it to rethink Latin American strategies. A shortage of trained workers, engineers and equipment has driven up costs in Brazil, and Chevron faces an $18 billion environmental verdict in Ecuador.

Chevron is stopping production plans to better assess its "reservoir management plans" in Brazil, where it has spent over $2 billion developing the largest foreign-run oil field. The suspension will shut down a field with the capacity to produce 80,000 barrels a day, more than 3 percent of Brazil's oil output.

Chevron, which made public on Thursday the request to suspend output at Frade, said the plan was supported by its partners in the field: Brazilian state oil company Petrobras and Frade Japan, which is owned by Japan's Inpex , Japanese trading house Sojitz and Japanese state oil and metals group JOGMEC.

Chevron owns 52 percent of Frade and operates the field. Petrobras owns 30 percent and Frade Japan, 18 percent.

"The decision to request the temporary shut-in of production is a precautionary measure," Chevron said in the statement. "The company will conduct a comprehensive technical study and prepare a complementary study to better understand the geological features of the area, working with partners."

NAVY SPOTS STAINS

Navy staff found the stain on Friday after flying over the area off Brazil's Atlantic coast, according to a statement late on Friday. The navy, the ANP and environmental protection agency Ibama will monitor and coordinate actions with Chevron to control the stain, the statement added.

Most of the oil coming from the leak is being captured by specially built containment devices, Chevron said, adding additional devices would be installed as needed.

Chevron said on Thursday there was no evidence that the new leak and the one in November were related.

Natural oil leaks in the Campos Basin, home to the Frade field, are common, Cleveland Jones, a geologist at UFRJ, the state university of Rio de Janeiro, said in an interview.

"Until there is some proof, there is a good chance that this leak is a natural occurrence, not something to do with Chevron," he said. "Leaks of this size are common, and are how people realized there was oil in the area in the first place."'

ANP, Brazil's navy and Ibama officials will meet early next week to assess the situation.

($1 = 1.80 reais)

(Additional reporting by Maria Pia Palermo in Rio de Janeiro; Editing by Peter Cooney)

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