Federal police in Brazil on Wednesday recommended the indictment of several Chevron and Transocean officials involved in an oil spill in early November for environmental crimes and withholding information in an investigation.

The indictment is unrelated to a civil suit brought against the companies by a public prosecutor on December 14, seeking fines of $11 billion for their alleged roles in the spill at Chevron's Frade field off the coast of Rio de Janeiro.

This latest legal action against Chevron, the No. 2 U.S. oil company, and Transocean, one of the world's biggest drillers, for a 3,000-barrel spill that never reached Brazilian beaches highlights the major political risks of operating in Brazil.

Head of the investigation for the federal police in Rio de Janeiro Fabio Scliar said on Wednesday he submitted his report to the Federal Public Ministry recommending that it bring charges against the two companies and its employees.

I affirmed my conviction ... of environmental crimes and withholding information, Scliar told Reuters by phone.

Employees of the two companies, including Chevron's Brazil Chief Executive George Buck, could face charges if the federal prosecutor's office, which is in recess until 2012, accepts Scliar's recommendations and pursues them in the courts.

Scliar said the companies were increasing the risks of an environmental accident in drilling.

They were betting on luck and lost, which caused this whole problem that led to environmental losses of grand proportions, Scliar said.

Chevron said it was advised the police were seeking indictments against its employees in Brazil, but that it believes these are without merit, a company spokesman said.

We will vigorously defend the company and its employees, spokesman Kurt Glaubitz said in an email. The facts ... will demonstrate that Chevron responded appropriately and responsibly.

Representatives from Transocean also said the indictments were groundless and that the facts would exonerate the company and employees when fully examined.

Although such alleged crimes could carry sentences of over 10 years, according to some experts, it is unlikely any of the employees of Chevron or Transocean would spend time in jail.

Soon after announcing a series of stunning discoveries in 2006 and 2007 that would become known worldwide, Chief Executive Jose Sergio Gabrielli at the state-controlled oil company Petrobras said exploration of the massive offshore subsalt deposits was virtually without risk.

The storm that Chevron's relatively small spill last month has caused in the local courts will cast a pall over one of the most promising new oil frontiers in decades and gives investors reason for pause before they pay top dollar for offshore blocks that concession holders are looking to farm out.

(Reporting By Bruno Marfinati and Reese Ewing; Editing by Eric Walsh)

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