Here's how a post-oil spill scenario develops in board rooms:
Executives have to come out with very good explanations for its shareholders why RIG was involved in two oil spills this year.
What risks they have in the future: age of the rigs fleet, quality of the refurbishments done, level of training of the personnel, costs of implementing safety measures to prevent future disasters.
If I was one of those executives I'd be calling friendly journalist to place in the press analysis -you see independent analysis- that would help me takes the pressure I am facing so I could better argue my case.
Note, please, Chevron cannot lift camp and move to Fort McMurray.
There's a queue of other companies to take Chevron place in Santos Basin.
Such a disaster with foreign rig owner is surely going to be used by Brazilian interests to further increase the local content they want government to support. ( an more easy money from BNDES, to finance it, mind you.)
See how a friendly journalist piece looks like below. It is all internal politics, this surely deflects the fire from under my chair.
Chevron in Brazil: one messy oil spill
December 16, 2011 7:29 pm by Samantha Pearson
Compare and contrast the following oil spills:
The Gulf of Mexico disaster last year released 4.9bn barrels of oil into the sea, killed 11 people, and caused extensive damage to the local coastline, and fishing and tourism industries. BP, the operator of the well, booked more than $40bn in losses as a result.
Last month, less than 3,000 barrels of oil spilled from Chevron’s Frade field off the coast of Rio de Janeiro, killing no one and causing no visible impact to the local coastline. C hevron is being sued, jointly with rig operator Transocean, for R$20bn ($10.6bn) and both companies face being kicked out of Brazil.
Somewhat of an overreaction perhaps?
As Bloomberg points out:
That’s about $8,163 per barrel spilled, compared with $3.57 million per barrel if the Brazilian fine were to hold.
The differentiating factor is, of course, politics.
Brazil is currently wrangling over changes to oil regulations ahead of the development of Rio’s lucrative ‘pre-salt’ reserves, which are estimated to contain between 50bn and 200bn barrels of oil buried deep in the seabed.
The federal government plans to redistribute the tax windfall from such projects more widely across the country, but Rio authorities argue this will deprive the state of its main source of revenue. Rio needs the money to cope with the environmental impacts of the pre-salt bonanza, as well as for social projects and to prepare for the World Cup and the Olympics, they say.
It’s no surprise, then, that most of the outcry over Chevron’s spill has come from the state, not the federal government. The lawsuit was filed in Campos in Rio de Janeiro, the city which has the most to lose from the new regulation. The damning comments have also mainly come from Carlos Minc, the country’s former environment minister who is now state environment secretary for Rio.
As such, the request for $10.6bn in damages (a rather arbitrary figure given that no damage is yet visible nor has any study been concluded) seems to be a message to Brasília, not Chevron or Transocean. In other words: “Guys, look how much we need to clean up after a little spill from Chevron! We’re going to need a hell of a lot more for pre-salt so think twice before giving away our money to other states.”
Where does this leave Chevron and Transocean though? Most in the sector believe a permanent ban at least is unlikely. After all, Transocean operates too many rigs in Brazil, including those used by state-owned oil company Petrobras.
But the whole incident should also serve as a warning to other foreign companies eyeing up Brazil’s oil industry. Although Chevron and Transocean have undoubtedly been caught up in a political power game, critics say both companies could have done more to prepare for such a disaster and done a better job of cleaning up afterwards.
Even simple things like having more executives at the companies who could speak Portuguese would have helped get rid of some of the bad feeling among the influential local press and government officials.
After all, if Chevron doesn’t get it right in Brazil, there will always be someone else around the corner waiting to take their place in one of the world’s most promising oil industries. |
