Brazil is taking Chevron to the wall. After spilling 3,000 barrels off the coast of Rio de Janeiro, the company is facing an $11 billion lawsuit and a criminal indictment together with driller Transocean, the suspension of its drilling rights, and calls for it to be expelled from the country. There’s nothing I like better than seeing oil companies called out for pollution – but unfortunately this one strikes me as more political theater than an actual hard line against the oil industry.
Chevron didn’t do itself any favors in this case. It took more than a week to accept responsibility for the incident, initially describing the spill as a “sheen” caused by natural geological seeps. But an American oil company will have a target painted on its back wherever it goes. The real litmus test will be how Brazil reacts to an incident like this from a local company. Or rather *the* local company – Petrobras, which produces close to 90 percent of Brazil’s crude.
This is the company with its hands on Brazil’s ultradeep water fields that over the last five years that have given the country an extra bounce in its already cocky I’m-gonna-take-over-the-world swagger. It’s the guardian angel that jumps into everything from sugar cane ethanol to power generation to carnaval school sponsorships. The government has built its entire industrial policy around creating a domestic oil services industry that will supply Petrobras with oil platforms and drilling rigs. Petrobras is Brazil’s largest company, its transnational par excellence, and the government’s golden boy.
So what happens when Petrobras spills a few thousand barrels on it of its dozens of offshore platforms? Their exploration chief says it’s totally ruled out, and that water depth has nothing to do with the likelihood of an accident. We believed the same sort of thing at the start of last year, when no one had ever heard of a blowout preventer and nobody imagined that failing to control well pressure when transitioning from exploration to production phases could result in America’s worst-ever environmental disaster. This time the problem was that Chevron misgauged the reservoir pressure where it was drilling, which popped a hole in the ocean floor a few hundred meters from the well. It’s hard to know how many other unexpected oil field accidents are lurking out there. None of them seem real up until the moment they are.
And it’s not as if Petrobras has a completely clean bill of health when it comes to safety. There have been plenty of recent issues including platform problems, union complaints, and a working dying when a diesel tanker caught fire. Not to mention this infamous incident that seems to have escaped public memory, and based on my cursory searches, did not cost Petrobras anything in the region of $11 billion. With its ambitious plans to drill at unprecedented depths to find new oil reserves and its budget already stretched thin, the company has little interest in replacing or upgrading ageing platforms at its shallower water fields that are closest to the shore.
I’ve noticed Petrobras’ larger than life presence in Brazil has left oil almost entirely off the radar screen of one of the world’s most active environmental movements. It’s the pride and joy of the new Brazil, its logo is on everything, its shares are present in probably 99 percent of Brazilian retirement portfolios. No hot-to-trot state prosecutor is going to sex themselves up by chasing after Petrobras.
I remember calling around to environmental organizations a few months back looking for some rabble-rousing agitation about a start-up company that was looking to tap into what could be huge oil reserves in the Amazon. Here they were together – environment public enemy No. 1 and the world’s most famously threatened ecosystem. And yet the response I got from Brazil’s conservationists, so used to talking about soy, cattle, mining and hydroelectric dams, was one of baffled confusion. At least two representatives of well-regarded organizations said something to the effect of “Oil, uh, when that spills it’s bad for the environment, you know?”
My guess is that will be more typical of the reaction to a major Petrobras incident than the legal firing squad being deployed against Chevron.