Brazil spill prompts new deep-water drilling lawsuit

A supply boat works around an oil spill at the Frade field located in the Atlantic Ocean of the coast of Rio de Janeiro, on November 18, 2011. The spill occured at an offshore well operated by Chevron.

Stacey Vanek-Smith: An oil spill off the coast of Brazil last November is the subject of a lawsuit this week. Brazil is suing Chevron and Transocean over the spill. Scott Tong joins us now from the Marketplace Sustainability Desk. Good morning, Scott.

Scott Tong: Good morning Stacey

Vanek-Smith: Scott, how bad was the spill?

Tong: To put in perspective, this spill is one-tenth of one percent of the Gulf oil spill, which sounds small, but ever since that spill everyone has been very sensetive to these accidents.

Already, Chevron is being sued for $11 billion dollars for the spill in Brazil. And now prosecutors want to charge executives with environmental crimes and not let them leave the country. So this illustrates the risk and opportunity of Brazil market for the industry.

It is one of the "next big things" in deepwater oil. But as they see it, the Brazilian government may be spooking investors with what they consider a disproportionate reaction.

Vanek-Smith: Well is there a broader lesson here for international businesses?

Tong: They're often exposed to an extraordinary scrutiny in other countries. When I was reporting in China, any time there was suspicion that McDonalds something fishy, front page.

I asked John Mitchell at the Chatham House think tank in London about this - he says that's often the case.

John Mitchell: Foreign companies are especially exposed in the country where they are operating. They are viewed as foreign companies and therefore subject perhaps to - if not a higher - at least very severe expectations of good behavior.

Brazil is seen as getting less friendly to outsiders, and some analysts think this could slow investment and slow oil production at a time when supplies are tight.

Vanek-Smith: Marketplace's Scott Tong with the Sustainability desk. Thank you, Scott.

Tong: You're welcome.

About the author

Scott Tong is a correspondent for Marketplace’s sustainability desk, with a focus on energy, environment, resources, climate, supply chain and the global economy.

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