Brazil Charges Chevron, Transocean Executives For Oil Spill

Brazilian prosecutors filed criminal charges against Chevron (NYSE: CVX) and Transocean (NYSE: RIG) executives Wednesday for their role in a November offshore oil spill.

Among those facing charges is Chevron's Brazil CEO George Buck and Transocean's Brazil CEO Michael Legrand. Fifteen other employees also face charges. All have been barred from leaving the country.

Each will have to post $550,000 bail, and both Chevron and Transocean will have to set aside $5.4 million to pay for future fines, prosecutors said, Reuters reported.

The charges allege Chevron created a prolonged contamination time bomb that will hurt the local environment, Reuters reported.

Chevron maintains the company acted appropriately.

Rio de Janeiro State Environment Secretary Carlos Minc told Bloomberg that Chevron behaved without caution when it drilled an appraisal well in November.

All evidence shows that Chevron acted carelessly, Minc told reporters in Rio de Janeiro Wednesday, Bloomberg reported. It was too eager and didn't respect agreements with regulating agencies.

Chevron Pledges Cooperation

Chevron has said it will abide by any legal decision, but that it will also defend its employees. Chevron spoklesman Kurt Glaubitz said the charges are outrageous and without merit. He added the facts will absolve the company and that it responded appropriately.

There is no technical or factual evidence demonstrating any willful or negligent conduct by Chevron or its employees associated with the incident, he said. We have sought to perform our operations in full compliance with Brazilian laws and industry practices and to comply with all applicable licenses and authorizations.

Transocean spokesman Guy Cantwell said his company has alway cooperated with authorities, but will continue to defend its staff.

Marcelo del Negri, a spokesman for prosecutors in Rio de Janeiro state, said criminal charges will be put before the courts. A judge will then have to decide if the employees will face a trial, the Associated Press reported.

In November, a Chevron appraisal well off Brazil experienced a spike in pressure that fractured the ocean floor. Oil started seeping through the fractures. Roughly 2,400 barrels of oil leaked.

Another Oil Seep

Chevron is facing a $11 billion suit in Brazil for the spill.

Last week, a small oil slick was reported to Brazilian authorities. Chevron announced small droplets of oil were escaping through a seep in the ground in the same vicinity as the earlier leak.

Brazilian oil regulators found five leaks along an 800-meter-long fissure on the ocean floor.

Chevron officials said Wednesday the oil from the second leak was chemically different from the first. The second leak has since been contained and Chevron's operations in the area have been temporarily suspended.

Chevron shares closed down $1.17 at $107.91 on Wednesday.