Saturday, March 31, 2012

Exclusive: Brazil prosecutor plans wider offshore oil probe

RIO DE JANEIRO (Reuters) - A Brazilian federal prosecutor plans to expand his investigation of a November offshore oil spill in a field run by Chevron to areas operated by other companies in the country's main oil region.
The probe will explore geological conditions and operational practices in the Campos Basin in an attempt to prevent future accidents, said Eduardo Santos de Oliveira, federal prosecutor for Campos, Brazil, the city for which the offshore oil province is named.
The biggest operator in the Campos Basin is Petrobras, Brazil's state-led oil company, which operates 39 of the 47 producing fields in the region, according to Brazil's oil regulator, the ANP.
"Now that the working environment has been created (by the Chevron spill), let's promote this debate and use the official investigation tools to try to understand this situation, including for preventative reasons," Santos de Oliveira told Reuters.
Santos in November launched a 20-billion-real ($10.9 billion) civil-environmental lawsuit against California-based Chevron and its drilling contractor Transocean. Earlier this month he filed criminal charges against Chevron, Transocean and 17 of their employees. The crimes alleged by the criminal case carry sentences of up to 17 years in prison.
Chevron is the No. 2 U.S. oil producer.
Other companies with exploration or production operations in the Campos Basin include Anglo-Dutch Shell, Brazil's OGX Petroleo, Spain's Repsol YPF, Denmark's Maersk Oil and UK-based BP.
The Frade field, operated and 52 percent owned by Chevron, is close to some of the largest oilfields in Brazil, including Marlim Sul, Roncador and Marlim, all 100 percent owned and operated by Petrobras.
The region is known to contain sub-sea rock that is porous and prone to cracking. If not covered with a natural seal that stops oil flow, petroleum can seep through it naturally to the seabed and then bubble to the surface.
"The Campos Basin is prone to natural seeps that can stain the ocean," said Cleveland Jones, a geologist at the National Oil Institute at the State University of Rio de Janeiro. "That, in fact, is one of the reasons that geologists knew that there was a good chance of finding oil there in the first place."
Such natural seeps are even more common in the Gulf of Mexico, Jones said. Most natural spills are broken up by wave and tide action and oil-eating bacteria.
The porous and fragile rock is believed to have been a contributing factor to the November leak in the Frade field. Chevron said oil seeped from a crack in the bore of an exploratory well and worked its way through the rock to the seabed and then ocean surface.
About 3,000 barrels leaked in the accident, less than 0.1 percent of the 4.9-million-barrel BP spill in the Gulf of Mexico in 2010. None of it reached shore and an ANP official told Congress in March that the Frade spill caused no discernible environmental damage.
Chevron and Transocean say the criminal and civil charges are excessive, they have committed no crimes and acted according to accepted industry practice.
Petrobras also has a 30 percent minority stake in Frade, while a Japanese group led by Inpex and Sojitz owns 18 percent.
Chevron, with the agreement of its partners, asked for and received permission to stop production temporarily at Frade after discovering unexplained leaks in the field in early March.
Oil leaks were also found in 2004 at Petrobras' Marlim Sul field. Marlim Sul's production of 300,000 barrels a day makes it Brazil's top-producing field.
Petrobras said studies suggested the Marlim leak probably resulted from "the existence of natural faults and fractures in the reservoir where the oil migrated to the sea floor".
Santos says the Frade accident gives his federal prosecutors office, known as the Public Ministry, a chance to fulfill its constitutional role as an independent arbiter of government and economic activity.
"Whenever you have an accident of this type, it is normal that public agents concentrate on the accident to make those responsible take responsibility," he said. "But the recent accident is also an opportunity to seek to identify what is happening with the rest (of the area)."
(Writing and additional reporting by Jeb Blount in Rio de Janeiro; Editing by Dale Hudson)

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SKorea to work with US to reduce Iran oil imports

SEOUL, South Korea (AP) — South Korean officials said Saturday that they will continue working with the U.S. to reduce oil imports from Iran after President Barack Obama greenlighted potential sanctions against countries that continue to buy Iranian oil.
South Korea is one of several major importers of Iranian oil that have not received exemptions from the U.S. sanctions.
Obama announced Friday that he is plowing ahead with the potential sanctions, which could affect U.S. allies in Asia and Europe, as part of a deepening campaign to starve Iran of money for its disputed nuclear program.
The sanctions aim to further isolate Iran's central bank, which processes nearly all of the Iran's oil purchases, from the global economy. Obama's move clears the way for the U.S. to penalize foreign financial institutions that do oil business with Iran by barring them from having a U.S.-based affiliate or doing business here.
Obama's goal is to tighten the pressure on Iran, not allies, and already the administration exempted 10 European Union countries and Japan from the threat of sanctions because they cut their oil purchases from Iran. Other nations have about three months to significantly reduce such imports before sanctions would kick in.
Foreign Ministry officials in South Korea said Saturday that they expect to reach an agreement with Washington by late June on reducing oil imports from Iran. The officials declined to be named because discussions were still under way.
South Korea has already restricted financial dealings with more than 200 groups and individuals with suspected links to Iran's nuclear program. Seoul relies on Iran for up to 10 percent of its oil.
Energy-starved India, which relies on Iranian oil for 12 percent for its power needs, has said that while it would accept U.N. sanctions against Iran, it does not heed unilateral sanctions such as those imposed by the U.S. and EU.
Nevertheless, New Delhi has not remained completely immune to sanction pressures and is slowly easing its dependence on Iranian oil, with a slow decline in Iranian oil imports. The Western sanctions also have made it harder for Indian companies to pay for Iranian oil, with international banks unwilling to handle transactions from Tehran.
In February, India irked the West by arranging to make 45 percent of its yearly $11 billion oil payments to Iran in Indian rupees, with the rest paid in a barter system as Tehran seeks Indian-made machinery, iron and steel, minerals and automobiles. Barter might also be in wheat, soybean and
The government has said simply that India needs the Iranian crude, noting that its aging refineries are configured for Iranian crude, and retrofitting them would be costly.
On Thursday, India along with its BRICS bloc partners China, Russia, Brazil and South Africa said they believed negotiations were the best way to resolve worries over Iran's nuclear program, while also supporting "Iran's right to peaceful uses of nuclear energy."
The U.S. sanctions are set to take effect on June 28. A European oil embargo, approved in January, starts in July.
Put together, Obama administration officials contend Iran is about to face its most severe economic pressure ever.
The United States imports no oil from Iran.
The main importers of Iranian oil that have not received exemptions from the U.S. are China, India, Turkey, South Africa and South Korea. The administration would be loath to hit a close friend like South Korea or India, or a NATO ally like Turkey, with sanctions, and is working with those countries to reduce their imports.
Turkey announced Friday it was shrinking oil imports from Iran by 20 percent, apparently bowing to pressure from the United States and the sanctions threat.
U.S. officials hope ratcheting up economic pressure will both push Iran to abandon its nuclear program and convince Israel to give sanctions time to take hold before pursuing a military strike on Iran's nuclear facilities.
The U.S. and allies believe that Iran is pursuing a nuclear bomb; Iran denies that.

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