* Could have settlement by Christmas -prosecutor
* Oil company willing to pay $144 mln in settlement
* Prosecution originally sought about $20 bln
By Jeb Blount
RIO DE JANEIRO, Dec 14 Chevron Corp is willing
to pay about 300 million reais ($144 million) to settle lawsuits
in Brazil over an oil spill last year, a senior executive and a
federal prosecutor said on Friday.
The talks over a possible settlement reinforce expectations
of a swift resolution for Chevron, the No. 2 U.S. oil
company, and its drilling contractor Transocean Ltd.
Related moves by Brazil's oil regulator, the ANP, could also
lead to a quick restart of output at Chevron's Frade field, the
location of the spill, which has been shut since March.
"We could have an agreement before Christmas," Gisele Porto,
the prosecutor responsible for the case, said after a public
hearing. "The amount is reasonable, and I don't think I could
get a judge to sign off on more."
She said Chevron and Brazil's oil regulator, the ANP,
suggested that the settlement include 311 million reais worth of
damages and additional measures to improve the safety of
offshore oil operations.
"It's our understanding that if this settlement is accepted
that the civil lawsuits will be extinct," said Rafael Jaen
Williamson Chevron's director of corporate affairs in Brazil.
Chevron will pay the entire cost of the settlement,
Williamson said. Transocean was found to have no responsibility
in the spill by the ANP.
The expected settlement amount is less than 1 percent of the
nearly $20 billion in damages initially sought by prosecutors in
the case, Brazil's largest-ever environmental prosecution.
"The prosecutor asked for too much and asked for it before
investigations of the spill were even complete," said Porto, who
took over the case earlier this year.
The proposed settlement represents between six weeks to two
months of Chevron's share of output from the Frade field.
Chevron has a 52 percent stake in the Frade field, which was
producing 60,000 barrels a day before it was closed on March 15.
The heavy crude pumped at Frade trades at a discount to Brent
crude, which has averaged $110.33 per barrel since then.
Brazil's state-led Perobras owns 30 percent of output from
Frade and Frade Japan, a Japanese group controlled by Sojitz
Corp and Inpex Corp, owns 18 percent.
"I'm extremely disappointed," said Eduardo Santos de
Oliveira who launched the original lawsuit but handed off the
case to Porto and colleagues when it was moved from Campos de
Goytacazes to Rio de Janeiro in April.
"I think this sends a message that you can pollute and then
escape a conviction by just paying a fine, I don't think that's
right," he said in a telephone interview on Friday.
Chevron, Transocean and 17 of their employees also face
criminal charges that carry jail terms of up to 31 years in the
largest environmental prosecution in Brazil's history.
That case has also been shifted to Rio de Janeiro and will
be handled by Porto.
OUTPUT EXPECTED TO RESUME
While smaller than the fines originally requested by
Oliveira, Chevron's Williamson said the value of the proposed
settlement is well above what other such cases would suggest.
Using the amounts paid to settle lawsuits in the
750,000-barrel Exxon Valdez spill in Alaska in 1989 and the
5-million-barrel 2010 Deepwater Horizon disaster the Gulf of
Mexico, Chevron lawyers determined that 30 million reais would
be a reasonable amount for its 3,600 barrel spill.
Chevron and the ANP proposed paying 90 million reais, or
triple its baseline estimate, for environmental damages, Porto
said. The rest of the settlement's cost would be to pay for
equipment and measures to prevent future spills.
In a separate regulatory case, the ANP is wrapping up its
investigation of the spill by checking if Chevron has taken the
necessary steps to correct problems, said Raphael Moura,
operational security superintendent of the ANP.
If inspections of the installations in the Frade field are
satisfactory, Chevron could be given the go ahead to restart
production within two months, Moura said after the hearings.
"We'd be ready to ramp up production almost immediately,"
Williamson said. He added that permission to drill new wells or
restart water injection to boost output would require additional
No one was hurt in the Frade accident. No oil reached shore,
and there was no discernable environmental damage, according to
the ANP. Nor was there any measurable harm to marine animals,
Chevron lawyers said at the presentation.
In the Exxon Valdez and Deepwater Horizon cases thousands of
seabirds and other animals such as whales and turtles were
killed and fishing grounds were polluted and disrupted.
Eleven were killed and 17 injured in the fire on BP Plc's
Deepwater Horizon drilling rig.
On Nov. 15, BP agreed to pay a record $4.5 billion in
penalties and plead guilty to criminal misconduct charges in the