Chevron has proposed a deal to Brazilian prosecutors to resolve Real 40 billion ($19.17 billion) in outstanding legal actions over the Frade Field oil spill.
In the proposal, discussed at a public hearing at federal prosecutors' offices in Rio Friday, the company would make changes to its conduct, provide extra environmental protection support, and pay Real 311 million ($149.1 million).
The hearing was chaired by Federal Prosecutor Gisele Porto, who is handling the two civil actions against Chevron and Transocean over the incident in November 2011 in which some 3,700 barrels were leaked, and a much smaller spill in March after which Chevron suspended production.
Officials from Brazil's National Petroleum Agency, the ANP, and environment agency, Ibama, also took part, as well as representatives from Chevron and Transocean.
The hearing was held to discuss a TAC -- a Conduct Adjustment Term -- which officials said the company had proposed to resolve the two outstanding civil actions against the company over the leaks, each of which is for Real 20 billion.
"If I don't take this Real 311, who can tell me that a judge will give me more than this?" Porto told reporters after the hearing. "I think more than this is difficult."
Renato Machado, a federal prosecutor from the city of Sao Joao de Meriti who also took part in the hearing, suggested that accepting a definite offer of Real 311 million would make more sense than waiting for a final decision from a Brazilian judge "20 years from now, to decide the last of the last appeals."
Rafael Williamson, Chevron's director of corporate affairs in Brazil, said that Porto had called all parties to discuss the options over the outstanding legal cases.
"Out of these discussions came the possibility of a TAC, which obviously for Chevron is an intelligent, prudent option," said Williamson. "She asked us to bring ideas and a proposal. And we incorporated everything that we learnt in these months in the proposal." Williamson added: "We would accept this value because this value is reasonable."
Chevron will also have to provide additional environmental protection measures as part of the proposed deal. "We would have environmental education programs, recruitment of people, a dedicated boat for operations in the case of an environmental incident, and various other measures of this sort," said Williamson. "All of them will be dedicated to improving the prevention capacity of the community and the industry."
ANP officials at the hearing confirmed that Transocean has been absolved from responsibility for the action -- as detailed in its report earlier this year. Asked if Chevron will take full financial responsibility for the Real 311 million being discussed, Williamson replied: "Absolutely and totally."
For Chevron, a return to production in Frade is dependent on ANP approval. Raphael Moura, superintendent for operational security and the environment at the ANP, told Platts that there was no date for Chevron to resume production.
One outstanding issue is a detailed report on any environmental damage by Brazil's environment agency, Ibama. Prosecutor Porto said she had been promised the report in the next few days.
"Ibama did an immediate report," said Cristiano Vilardo, general coordinator for oil and gas at Ibama told Platts. "Then the federal prosecutors asked for a more detailed report as a base for what is being proposed. This report is being done by Ibama and the expectation is that it will be published by the end of the year."
Vilardo confirmed that two Ibama fines to be levied on Chevron, one for Real 50 million and one for Real 10 million, are still being processed and could not give a date for their finalization.
Chevron has already paid an initial ANP fine of Real 35.1 million, which was reduced by 30% because the company did not appeal the value and paid promptly.
There is still no date for a final resolution -- the proposed TAC will need to go before a Brazilian judge. "If he agrees, and it's difficult for him not to agree agree if it's been agreed by the ANP, by Ibama and by federal prosecutors, this is judged as if it was a ruling," said prosecutor Renato Machado.
Also outstanding is a criminal proceeding against Chevron, Transocean and 17 employees of both companies. Those allegations are also the responsibility of Porto, but she said she has yet to receive the documentation.
