Brazil oil spill company in spotlight

Barriers used to fight the slicks have been ineffective

By Jan Rocha in Brazil

Two massive oil spills in Brazil in six months last year focused international attention on the state oil company, Petrobras.

A disastrous oil leak at the Brazilian refinery near Curitiba in the southern state of Parana was state producer Petrobras's sixth environmental accident in 2000.

It came only six months after an oil spill of more than one million litres polluted Rio de Janeiro's picture-postcard Guanabara Bay.

The leak revealed an embarrassing level of incompetence. It was only detected two hours after it began because the 23-year-old oil pipe did not have modern oil pressure detectors.

Petrobras workers are being blamed for negligence

And the barriers Petrobras used to try to stop the oil travelling upriver were designed for use at sea, and therefore failed to do their work properly.

Strangely, the company has just won an award for environmental excellence, which is now being questioned.

Click here to see a map of the area

On Friday, Petrobras pinned the blame on a combination of a forgetful worker and a faulty pipe joint which broke before an emergency valve could release the rising oil pressure.

But there have been no shortage of alternative theories for the disaster.

Sabotage

Some Petrobras engineers even raised the possibility that the latest leak could have been caused by sabotage, to make the company, once a source of pride to Brazilians, unpopular and facilitate its sell off.

The famous Iguacu falls have been protected ...

The government is engaged in a policy of privatisation of Brazil's hundreds of state companies but because of the patriotic sentiment that has always surrounded Petrobras, it has denied plans to sell it off completely.

But accused by the Brazilian Environment Minister, Jose Sarney Filho, of negligence, and threatened with a multi million dollar fine, Petrobras is now being seen as a villain.

Petrobras was set up in 1950 as the result of a campaign to nationalise Brazil's oil.

Up until then exploration and production had been in the hands of American companies.

In the last 30 years Petrobras has discovered important offshore oilfields along the Brazilian coast and now supplies 65% of the domestic market.

With a population of 165 million, Brazil consumes 1.8 million barrels a day.

... but the slick has polluted rivers throughout the area

Petrobras also has an overseas arm called Braspetro, which runs successful operations in the Middle East and Latin America.

But up until 1975, Brazil relied on imported oil to supply the needs of its fast growing economy.

Then came the oil shock, with a disastrous effect on Brazil's balance of payments caused by the huge hike in international oil prices.

New fuels

This led to the decision to invest heavily in offshore exploration and turn to a new fuel, gasohol, produced from sugarcane alcohol to substitute petrol.

Under the Pro-Alcool programme, farmers received generous subsidies to turn their fields over to sugarcane.

The price at the pump was also subsidised to make the new fuel cheaper than petrol. As a result, by the 1980s, more than 90% of the cars produced by Brazil's car factories were designed for alcohol consumption.

Although performance was slightly lower, the alcohol fuel had the advantage of being much less polluting than petrol. However when oil prices fell again, the incentive for the alcohol programme disappeared.

In the 1990s Petrobras discovered a huge natural gas field in the Brazilian Amazon. The company has also developed state of the art technology for deep sea exploration and production.

But the one area where it has consistently failed is in environmental protection.

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