By Joe Carroll, Juan Pablo Spinetto and Edward Klump – Dec 23, 2011 10:15 AM GMT

Brazil’s threatened indictment of Chevron Corp. (CVX) and Transocean Ltd. (RIG) executives after offshore oil leaks shows that regulators from the North Sea to the Indian Ocean are stepping up scrutiny after BP Plc’s 2010 disaster.

Brazilian authorities have said they may prosecute employees, shut operations and exact more than $10 billion in fines after the leaks at the Frade field 230 miles (370 kilometers) off the coast of Rio de Janeiro. The spill occurred 19 months after an explosion in the Gulf of Mexico killed 11 workers and triggered the biggest offshore U.S. oil spill.

Governments around the world are paying closer attention to how energy explorers drill into high-pressure deposits of crude and natural gas as much as 8 miles beneath the sea surface. Chevron’s Brazil incident took place after a ConocoPhillips (COP) leak in China and prior to what may be Nigeria’s biggest spill in a decade at a Royal Dutch Shell Plc facility.

“There’s been just such a rash of them that governments have got to act tough” with oil companies, Allen Brooks, a managing director at energy-investment bank PPHB LP in Houston and Chevron shareholder, said in a phone interview. Since the BP accident “every spill after that is heightened in terms of media attention and obviously government concern.”

ConocoPhillips was criticized by the People’s Daily, China’s Communist Party newspaper, for “negligence, cover-ups and cheating” in its handling of a June leak in Bohai Bay. Premier Wen Jiabao ordered a “thorough” investigation in September.

In Nigeria, Royal Dutch Shell (RDSA) shut its 200,000 barrel-a-day Bonga field this week after a tanker-loading accident caused less than 40,000 barrels of crude to leak.

Olympic Hosts

Brazilian officials are seeking 20 billion reais ($10.8 billion) in penalties from Chevron for the Nov. 7 leaks that the San Ramon, California-based company has estimated at 3,000 barrels.

The furor in a nation keen to protect beaches from floating globs of crude ahead of the 2014 World Cup and 2016 Olympic Games may lead to new drilling rules so tough that oil exploration becomes unprofitable, said Adriano Pires, an economist and former adviser to Brazil’s state oil ministry.

“What I fear is now we have a circus created around the Chevron problem, a real circus, and to show the people they are doing something they may create norms, legislation and proceedings that make it impracticable to get environmental licenses for offshore exploring,” Pires, head of the Brazilian Center for Infrastructure, a Rio-based energy-industry consultancy, said in a telephone interview.

Making Exploration Expensive

“Depending on the measures that the government may take, it would make oil exploration in Brazil much more expensive,” he said.

Brazil’s federal police have said they intend to indict employees involved in the drilling that led to leaks from sea floor fissures near the $3.6 billion development, Kurt Glaubitz, a spokesman for Chevron, said in a Dec. 21 e-mail. In a separate statement, Transocean, owner of the drilling rig leased for the Frade field, said it will defend the company.

Chevron underestimated the amount of pressure at an oil deposit it was exploring, and crude leaked from the reservoir for about eight days, George Buck, president of Chevron’s Brazilian subsidiary, said on Nov. 20. Buck was among 17 Chevron and Transocean employees targeted for indictments, the Folha de S. Paulo newspaper reported on Dec. 21. Glaubitz declined to identify the employees targeted for indictment.

Foreign Investment ‘Chill’

“I’m a little surprised by the stance that you’re seeing in Brazil, largely because it’s so excessive, potentially, that you could put a very big chill on foreign investment in the deep water,” Ted Harper, who helps manage about $6.8 billion in assets at Frost Investment Advisors in Houston, including about $50 million of Chevron shares, said in a phone interview.

The response so far in Brazil is an “overreaction,” he said.

Chevron has lagged its peers since the leaks were disclosed on Nov. 10. Chevron has gained 0.8 percent since then, compared with increases of 7.1 percent and 4.9 percent, respectively, for Exxon Mobil Corp. (XOM) and Shell, the biggest Western energy companies by market value.

ConocoPhillips, the third-largest U.S. oil company, said on Dec. 21 that it’s taking responsibility for the Bohai Bay spill and is setting up compensation funds to support environmental research and affected communities.

Royal Dutch Shell, Europe’s largest oil company, said yesterday as much as half of the crude that leaked from the Bonga installation has dissipated through natural dispersion and evaporation. Bonga, located 75 miles off Nigeria’s coastline, pumps about 10 percent of the West African nation’s oil.

Worst Since 1998

The leak may have been the country’s worst since a January 1998 spill dumped an estimated 40,000 barrels into the sea from the Idoho platform on the southeastern coast, with slicks reported as far west as Lagos. Shell, the largest foreign oil producer in Nigeria, has been criticized by some local residents and foreign groups for onshore spills.

An “independent verification” of the Bonga platform incident is needed to ensure the spill wasn’t more, Nnimmo Bassey, executive director of Environmental Rights Action, said in a phone interview from Lagos. “Shell has never been forthcoming about incidents of oil spills in the past.”

BP has booked more than $40 billion in losses related to last year’s Gulf disaster that sank Transocean’s Deepwater Horizon rig and spilled an estimated 4.9 million barrels of crude. The London-based oil producer also faces hundreds of lawsuits by fishermen, hoteliers and property owners in coastal areas where crude washed ashore.

More Awareness

Unlike the BP incident in the Gulf, this year’s Brazilian and Chinese spills are within the normal range of oil industry accidents, Nansen Saleri, chief executive officer of Quantum Reservoir Impact LLC in Houston, said in a telephone interview.

“What’s different right now, post-Macondo, is that there’s far more awareness globally at all levels,” he said. In the long run, the industry will develop better and more stringent procedures to help prevent small incidents, he said, and oil and gas development will continue.

“Those countries who choose to go on a very punitive path at the end will suffer the negative consequences themselves,” said Saleri, who is a former reservoir-management chief at Saudi Arabia’s state oil company.

To contact the reporters on this story: Joe Carroll in Chicago at jcarroll8@bloomberg.net; Juan Pablo Spinetto in Rio de Janeiro at jspinetto@bloomberg.net; Edward Klump in Houston at eklump@bloomberg.net

To contact the editors responsible for this story: Tina Davis at tinadavis@bloomberg.net; Dale Crofts at dcrofts@bloomberg.net

SOURCE ARTICLE

December 22, 2011, 11:33 AM EST

By Joe Carroll and Juan Pablo Spinetto

Dec. 22 (Bloomberg) — Chevron Corp., the operator of the Brazilian offshore well that triggered oil leaks, and rig owner Transocean Ltd. will defend executives threatened with criminal indictments in the South American nation.

Chevron learned that Brazil’s federal police intend to indict employees involved in the drilling that led to the Nov. 7 leaks from seafloor fissures near the $3.6 billion Frade development, Kurt Glaubitz, a spokesman for the San Ramon, California-based company, said in a statement late yesterday. Transocean, in a separate statement late yesterday, said it will “vigorously defend the company and its collaborators.”

Chevron, the second-largest U.S. energy company by market value, has been fined 50 million reais ($26.9 million) and ordered to halt all drilling and crude production off Brazil’s coast after discovering the leaks last month. Chevron estimated the volume of the seeps at 3,000 barrels during the eight days it took for the company to locate and halt the leaks.

Chevron and other offshore oil explorers are facing increased scrutiny of their drilling practices in the wake of BP Plc’s 2010 blowout of a well in the Gulf of Mexico that killed 11 workers and led to the worst U.S. offshore crude spill.

In Brazil, the concerns have been compounded as the coastal city Rio de Janeiro prepares to host the 2014 World Cup and the Olympic Games two years later. Chevron’s Frade oil field is about 230 miles (370 kilometers) northeast of Rio in a region of the Atlantic Ocean known as the Campos Basin.

Employees Indicted

Chevron underestimated the amount of pressure at an oil deposit it was exploring, and crude leaked from the reservoir for about eight days, George Buck, president of Chevron’s Brazilian subsidiary, said on Nov. 20. Buck was among 17 Chevron and Transocean employees targeted for indictments, the Folha de S. Paulo newspaper reported yesterday. Glaubitz declined to identify the employees targeted for indictment. George wasn’t available to comment, the spokesman said.

Anthony Dovkants, a spokesman for Vernier, Switzerland- based Transocean, said in an e-mailed statement that the allegations were without merit.

Chevron rose 47 cents to $105.90 at 10:30 a.m. in New York trading. Transocean rose 1.3 percent to $40.39.

BP has booked more than $40 billion in losses related to last year’s Gulf disaster that sank Transocean’s Deepwater Horizon rig and spilled an estimated 4.9 million barrels of crude. The London-based oil producer also faces hundreds of lawsuits by fishermen, hoteliers and property owners in coastal areas where crude washed ashore.

Other Oil Spills

ConocoPhillips, the third-largest U.S. oil company, said yesterday it’s taking responsibility for two oil spills in China’s Bohai Bay in June and is setting up compensation funds to support environmental research and affected communities.

Royal Dutch Shell Plc, Europe’s largest oil company, shut its 200,000 barrel-a-day Bonga field off Nigeria after a leak during a tanker loading caused what may be the country’s worst offshore spill in more than a decade. The Bonga deep-water discovery produces almost 10 percent of Nigeria’s crude.

Exxon Mobil Corp. of Irving, Texas, is the biggest U.S. energy company by market value.

–Editors: Jasmina Kelemen, Tina Davis

To contact the reporters on this story: Joe Carroll in Chicago at jcarroll8@bloomberg.net; Juan Pablo Spinetto in Rio de Janeiro at jspinetto@bloomberg.net

To contact the editor responsible for this story: Tina Davis at tinadavis@bloomberg.net

SOURCE ARTICLE

By Arnaldo Galvao and Lucia Kassai – Dec 15, 2011 4:38 PM GMT

Royal Dutch Shell Plc (RDSA) and Cosan Industria & Comercio SA’s joint venture in Brazil has reached a preliminary accord to sell its jet-fuel unit to BP Plc, the nation’s antitrust regulator said today.

The venture, called Raizen, was granted an additional five days to present the agreement to the regulator before being fined, Olavo Chinaglia, interim president of the agency, said at a meeting in Brasilia today. Cade, as the regulator is known, ordered the sale after Shell and Cosan combined some assets in Brazil, including service stations and the jet-fuel unit that Cosan had bought from Exxon Mobil Corp. (XOM)

“Failure to carry out Cade’s decision means the operation will have to be reverted with a return of assets to Cosan,” said Chinaglia. “This would affects the assessment of the joint venture formed between Shell and Cosan.”

A final ruling on the entire joint venture hasn’t been scheduled yet, Cade’s attorney Gilvandro Araujo said. Raizen is the world’s biggest processor of sugar-cane into sweetener and ethanol.

To contact the reporters on this story: Arnaldo Galvao in Brasilia Newsroom at agalvao1@bloomberg.net; Lucia Kassai in Sao Paulo at lkassai@bloomberg.net

To contact the editor responsible for this story: Carlos Caminada at ccaminada1@bloomberg.net

SOURCE ARTICLE

This article should be read in conjunction with a related article: Brazilian Indians demand Shell leave their land

Extract:

Survival’s Director, Stephen Corry, said today, ‘It’s a sad irony that people buy Shell’s ethanol as an ‘ethical’ alternative to fossil fuels: there’s certainly nothing ethical about its horrendous treatment of the Guarani.

Guarani man. Shell is using sugarcane planted on Guarani land. © F. Watson/Survival

Brazilian tribe’s ‘unequalled’ suicide rate highlighted on World Mental Heath Day 7 October 2011

On World Mental Health Day (October 10) Survival International has warned of the fatal and lasting consequences land loss can have on indigenous peoples.

An epidemic of suicide unique in South America has beset one tribe in Brazil – ”the Guarani”:/tribes/guarani. More than 625 Guarani have taken their lives since 1981, the youngest just 9 years old.

The tribe has seen virtually all its land stolen in recent decades by farmers and cattle ranchers.

According to the World Health Organization, ‘indigenous peoples often have elevated suicide rates compared with the general population in their countries. Depending on the place and age group, the suicide rate can be over 100/100,000 per year, and two, three or more times higher than the general population.’

Guarani Indians evicted from their land, now camping by a highway.
© CIMI

This is particularly prevalent among the Guarani. A study initiated by Brazil’s Ministry of Health found the suicide rates amongst the tribe to be 19 times higher than the national average. It also noted a disproportionate effect on young and adolescent Guarani.

Survival’s Director Stephen Corry said today, ‘What could be a clearer sign of these people’s desperation than their children killing themselves? It’s a shameful indictment of Brazil’s economic ‘miracle’, propped up with stolen Guarani land. The suicides stop when the evictions stop.’

For further information on the effects loss of land and imposed ‘development’ can have on tribal peoples, see Survival’s ‘Progress can kill’ site.

SOURCE ARTICLE

By John Donovan

In the years immediately prior to WW2, Royal Dutch Shell was a business partner both Internationally and in Germany with IG Farben, the notorious German chemical firm, supplier of Zyklon-B gas to the Nazi death camps.

IG Farben used slave labor.

Extract from Time Magazine article 12 May 1947: Most damning charge was that Farben experimented on slave labor and concentration camp inmates with “deadly gases, vaccines and related products.” To supply slave labor for its synthetic rubber plant at Oswiecim, Farben allegedly constructed a concentration camp and worked the men, women & children so hard that an estimated 100 a day died from exhaustion. The U.S. would have no trouble proving that the Nazis could not have made war without Farben.

IG Farben directors were later convicted of war crimes in the Nuremberg trials – crimes including enslavement, murder of civilians, prisoners of war, and concentration camp inmates. Farben manufactured explosives and other vital war materials, including the oil and gasoline, which fueled Nazi tanks and planes used in the blitzkrieg.

There is some evidence that Royal Dutch Shell’s German subsidiary company also used slave labor.

Extract from a Boston Globe article “Cloaked Business” 19 November 2001: Newly declassified United States intelligence records reveal in unprecedented detail how US and Allied firms systematically used backwater countries to conduct backroom business with Axis enterprises. The files peel away a whole new layer of collaboration, describing scores of so-called “shadow agreements” in which corporations disguised their ties with the enemy through the cover of other companies in neutral countries, from Spain to Sweden to much of Latin America. The report said the two men also ran a steamship company that chartered tankers for Royal Dutch Shell, a Nazi collaborator that used Hitler’s slave laborers.

In 1986, Shell was accused of using slave labor in South Africa.

Extract from a Chicago Sun-Times article “U.S. unions urge boycott of Shell to fight apartheid”: The unions contend Royal Dutch/Shell, the world’s second largest multinational company in terms of sales, employs black slave labor in South Africa’s Rietspruit coal mine, of which it owns 50 percent with a South African firm.

Shell has now got into bed with Cosan S.A. – a ruthless company accused of using slave labor.

Related Bloomberg article: Cosan Falls on Slavery Charges

More information is provided in this extract of a May 2011 report published by Friends of the Earth Netherlands.

From pages 22, 24, 25 & 26 of “Royal Dutch Shell and its sustainability troubles” – Background report to the Erratum of Shell’s Annual Report 2010

The report is made on behalf of Milieudefensie (Friends of the Earth Netherlands)
Author: Albert ten Kate: May 2011.

On 25 August 2010, Royal Dutch Shell and the Brazilian sugar and ethanol producer Cosan S.A. have signed binding agreements to form a joint venture in Brazil. The definite formation of the joint venture is expected to occur in the first half of 2011. The name of the joint venture will be Raízen. “Due to the size of its operations, Raízen will help sugarcane ethanol, a sustainable, clean and renewable source of energy, to consolidate itself worldwide and strengthen Brazil‘s position in the international biofuels trading business,” stated its appointed Chief Executive Officer, Vasco Dias.

Case 4b Bad labour conditions sugarcane harvesters

Cosan’s short-lived inclusion into the “dirty list” of slave labour

On 31 December 2009, Cosan had its name included into the “dirty list” of slave labour published by the Ministry of Labour and Employment (Ministério do Trabalho e Emprego, henceforth MTE). The inspection resulting in Cosan’s inclusion in the “dirty list” took place in June 2007, at the Junqueira processing plant in Igarapava, São Paulo, when 42 workers were freed.

Right after MTE’s announcement, the Brazilian Social and Economic Development Bank (state agency, Banco Nacional de Desenvolvimento Econômico e Social, BNDES) and private company Walmart announced the cancellation of their business with Cosan. On 8 January 2010, Cosan’s lawyers succeeded in withdrawing the name of the company from the list, in a preliminary court order. They sustained that the 42 workers caught in a situation analogue to slavery had been hired by an outsourced company and their situation was not known to Cosan’s representatives. BNDES and Walmart soon resumed their business with the company. In its sustainability report 2010, Cosan stated that during the two-and-halve years before the inclusion to the dirty list, inspection reports had not referred to forced or compulsory labour, but rather to mere labour irregularities. At the end of 2010, Cosan made an agreement with the prosecutor of the federal government. In most cases, the prosecutor would appeal preliminary court orders, such as the order of 8 January 2010. Part of the agreement, however, was that the proscecutor would not appeal the court order. Opponents of the agreement stated that the prosecutor had set a precedent. Other companies would now also try to get excluded from the list through agreements with the procecutor. The possibility to reach an agreement could reduce the effectiveness of the “dirty list”, Brazil’s main instrument to combat slave labour.

Luís Inácio Adams, the head of the federal prosecutors office, stated that the arguments of the opponents were “legitimate”, but that the Cosan case was “exceptional”.

Slave labour quite common in Brazil’s sugarcane industry

Situations of slave labour are quite common in Brazil. Presently, about 4,000 workers per year are rescued. In 2009, the sugarcane industry was leader in number of slave labourers freed by inspection groups. A total of 1,911 workers in 16 cases were rescued, 45% of the total of 4,234 people freed during the whole year.

A review by the Ministry of Labour and Employment (MTE) shows that since the establishment of a Special Mobile Inspection Group in 1995, almost 39,000 workers were rescued in Brazil from a situation analogous to slavery. Between 1995 and 2002 there were almost 6,000 rescues, while between 2003 and 2010 there were almost 33,000 rescues. The review shows a significant increase in numbers from 2003 when Brazil launched the first National Plan for Eradication of Slave Labour.

As of March 2011, 211 companies were listed on the “dirty list” of slave labour. It should, however, be noted that Brazilian law defines forced labour or “slave like” or “degrading” conditions more broadly than the International Labour Organization (ILO) of the United Nations. Consequently, a company cited for violations of the Brazilian labour code is not necessarily guilty of employing slave labour, but may in fact have fallen short in some other area.

Sugarcane workers do not live where they work. Many migrate from the North-east, the poorest region of Brazil, to São Paulo State, the richest part of the country. Industry studies show that outsourced workers suffer worse conditions than their direct hire counterparts. The worst situations occur on small plantations that use out-sourced labour. Apart from the working conditions, many sugarcane cutters risk losing their job. Most of the large producers are replacing sugarcane cutters with harvesting machines, in order to improve efficiencies and to reduce sugarcane’s carbon footprint. With machines, the sugarcane fields no longer need to be burned to enable manual cutting. Mechanization destroys many of the cane-cutting jobs and leaves thousands unemployed.

Recent example: the rescue of fourteen farm workers

In July 2010, fourteen farm workers from Pernambuco state were rescued. The cane cutters worked for the Santa Lúcia farm in Santa Cruz do Rio Pardo (São Paulo state), a supplier to Cosan. The payments of wages were delayed for more than 15 days and there was no drinking water on work sites. In statements to the prosecutor, the workers said they were cheated by the employer, since they received half of the promised wages. Not satisfied with the working conditions and housing, the cutters stopped their activities of cutting sugarcane. Subsequently, the employer cut off the electricity and water within the cottages. After days without pay and without being able to work, workers reported the situation to the local prosecutor in Bauru.

When verifying the veracity of the complaint, through interviews and records of the degrading conditions on the scene, the prosecutor proposed the signing of a Terms of Adjustment of Conduct (TAC). The agreement stated that the Saint Lúcia group would terminate the employment contract of all migrants and pay the workers their rightful salary.

In addition, the company had to pay BRL 300 to each worker for the transport to the state of Pernambuco and BRL 264.50 for individual moral damages. Cosan stated that it would examine the events and examine the immediate disqualification of the supplier on its list of sugarcane suppliers.

Cosan’s recent labour irregularities

At the peak of the crop year ending 31 March 2010, Cosan had nearly 41 thousand employees.

Of this total, about 27 thousand employees were seasonal. More than 33 thousand employees work in the operations sector, especially migrants working on manual sugarcane harvesting. According to Cosan, a manual harvest worker effectively works 6 hours and 45 minutes a day and is paid around EUR 250 a month.

According to Cosan, in the 2010/2011 crop year, 100% of harvest workers working on land owned or leased by the company are Cosan’s own employees. In addition, approximately 80% of cane purchasing operations with third parties started to be performed by labour contracted directly by Cosan. Cosan states that by contracting labour directly it minimizes the risk of non- compliance with labour legislation, as the company has carried out intensive work to reduce possible non-compliance in its relationship with the workers. While the company seems to take some supply chain responsibility with regard to its sugarcane purchasing operations, in its sustainability report 2010 Cosan did not refer to any supply chain responsibility with regard to the ethanol it purchases directly from third parties. As the company is also a main trader of ethanol it doesn’t produce itself, the company should also publicly take responsibility for this part of its supply chain.

The following labour rights issues with regard to operations by Cosan have been found by the government in recent years:

− Production unit Da Barra, 2009: lack of records on workers’ entrance and exit hours; work on Sundays without a license; irregularities in Personal Protective Equipment (IPEs); and dirty bathrooms;

− Production unit Diamante, 2009: six workers without regular papers; no control on working hours; no time off on Sundays and holidays; cutting seven sugarcane streets instead of five; dirty bathrooms; irregular Labour Health Certificate, lack of a plan to assist accident victims; irregular lodging facilities; outsourced transport companies with no toilet or eating facilities;

− Production unit Benálcool. In June 2010, Cosan was ordered to pay a fine of BRL 26,100, because it had breached a Terms of Adjustment of Conduct (TAC). It was found that workers for the Benálcool Plant were subjected to work on Sundays and holidays, contrary to the established TAC. The fine was ordered by the local attorney of the Ministério Público do Trabalho.

− Production unit Univalem. In July 2010, Cosan was ordered to pay a fine of BRL 2,500,000, because it had breached two clauses of a TAC signed in 2007. The breaches happened at its unit in Valparaiso (Univalem plant). The company had pledged to give at least 11 hours off time between two days of work, and not to extend the normal working day beyond the legal limit. However, according to inspectors, 65 employees were found in an irregular situation with regard to granting no rest between two days, while 32 workers were found with excess journeys to and from work.147 Irregularities at the Univalem plant had been reported yearly between 2005 and 2008.

−Production unit Serra. In 2009 Cosan had to pay BRL 200,000 due to irregularities in working conditions at the Serra plant in the town of Ibaté (São Paulo)

− During spot checks carried out during 2008 by the Ministry of labour and employment (Ministério do Trabalho e Emprego, MTE) and by the local prosecutor in São Paulo (Ministério Público do Trabalho, MPT) irregularities were found in 18 plants of Cosan in different counties. The prosecutor Mario Antonio Gomes stated: “We found the lack of drinking water in work areas, lack of Personal Protective Equipment (IPEs), lack of a proper place for meals, among others.”

Click on the link below to read the remainder of this section of the report and the entire report.

THE COMPLETE 73 PAGE REPORT (with reference sources)

Royal Dutch Shell will invest more than $1.6bn in the second phase exploration of a key Brazilian oil block and also plans to compete in the country’s next auction of oil and gas concessions, senior company figures have disclosed.

An oil rig in Guanabara bay, Rio de Janeiro Photo: Alamy

By Robin Yapp, in Sao Paulo 7:07PM BST 21 Sep 2011

Already Brazil’s second biggest oil producer after the state-run energy giant Petrobras, Shell has had impressive results in the Campos Basin, part of Brazil’s pre-salt oil fields that lie deep below the Atlantic ocean and a thick layer of salt.

Production in the area has been 30pc higher than anticipated, convincing Shell to make substantial further investment in the hope of seeing similarly impressive results.

Andre Araujo, president of Shell Brazil, said the second phase development of the BC-10 block in the Campos Basin – in which Shell has a 50pc share and is believed to hold 400m barrels of recoverable oil – will start next year.

“To give you an idea of the importance of exploratory activity in Brazil for Shell, we are going to invest, just in the second phase of BC-10, more than the $1.6bn that we spent to set up Raizen [its joint venture Brazilian ethanol plant],” he said.

Marvin Odum, Shell’s director of exploration and production for the Americas, said the company would look to further expand in Brazil because it now appears a more attractive investment prospect than many other oil-producing nations.

“The opportunities that we find here are of the highest quality in global terms, both from the regulatory point of view and geological,” Mr Odum told business newspaper Brasil Economico.

“Because of this, we don’t believe that a recovery of production in countries such as Iraq and Libya, in the future, will reduce Brazil’s attractiveness. The pre-salt has areas of the highest quality.”

Mr Odum indicated that Shell was likely to compete when Brazil’s National Petroleum Agency auctions new exploration blocks off the country’s north-east coast in 2012 but said a final decision would be taken after details of the auction are published.

SOURCE ARTICLE

In a 2009 report on Brazil, the UN Special Rapporteur on the situation of human rights and fundamental freedoms of indigenous people, mister James Anaya, wrote that Mato Grosso do Sul “has the highest rate of indigenous children’s death due to precarious conditions of health and access to water and food, related to lack of lands.”

From pages 22, 23 & 24 of “Royal Dutch Shell and its sustainability troubles” – Background report to the Erratum of Shell’s Annual Report 2010

The report is made on behalf of Milieudefensie (Friends of the Earth Netherlands)
Author: Albert ten Kate: May 2011.

Joint venture with Brazil’s largest sugar and ethanol producer

On 25 August 2010, Royal Dutch Shell and the Brazilian sugar and ethanol producer Cosan S.A. have signed binding agreements to form a joint venture in Brazil. The definite formation of the joint venture is expected to occur in the first half of 2011. The name of the joint venture will be Raízen. “Due to the size of its operations, Raízen will help sugarcane ethanol, a sustainable, clean and renewable source of energy, to consolidate itself worldwide and strengthen Brazil‘s position in the international biofuels trading business,” stated its appointed Chief Executive Officer, Vasco Dias.

Cosan is Brazil’s largest sugar and ethanol producer, accounting for about 10 percent of Brazilian production. Ethanol made from sugarcane has become the most popular fuel for cars in Brazil, surpassing gasoline. Cosan is the world’s fourth largest ethanol producer and probably the world’s largest ethanol producer from sugarcane.

The deal calls for Cosan to transfer its units for sugar and ethanol production, fuel distribution and energy generation to the venture. Shell will contribute its retail fuel and aviation fuel distribution business, and its participation in the biomass technology companies Iogen Energy and Codexis.

After state oil giant Petrobras, the proposed joint venture competes with Ipiranga, a unit of Brazil’s Grupo Ultra, to become the second-largest fuel retailer in Brazil. In the fuel area, the joint venture will sell approximately 20 billion litres of fuels to the transportation and industry markets and to its network of over 4,500 retail sites.

All Cosan’s 24 sugarcane producing mills are located in the South-Central region of Brazil: 22 mills are located in São Paulo state, one in Jataí city (Goiás state) and one in Caarapó city (Mato Grosso do Sul state).

Brazil’s sugarcane plantations are located in the South-Central and North-eastern regions. These regions account for 89% and 11% of Brazilian production, respectively. Within the South-central region most is grown within São Paulo state.

Some of Cosan’s assets will not be included into the joint venture: the lubricant businesses; the sugar logistics business called Rumo Logistica; the land prospecting and development business called Radar Propriedades Agricolas, the food retail brands Da Barra, Uniao and other minor brands.

Sourcing sugarcane from occupiers of indigenous land

Since June 2009, Cosan owns a newly-built sugarcane plant in Caarapó, Mato Grosso do Sul state. Presently, the plant has a capacity to crush 2.5 million tonnes of sugarcane a year.120 The former owner has expected that the capacity will be over 6 million tonnes in 2017/2018. The plant is included into the Shell-Cosan joint venture plans, so soon it will be half owned by Shell.

To supply the Caarapó plant, Cosan sources mostly from new sugarcane plantations in the neighbourhood. One of its known sourcing areas are the farmlands of the Santa Claudina farm. This farm is located within the indigenous territory Guyraroká of the Guarani-Kaiowá Indians. The federal public prosecutor in Mato Grosso do Sul stated in May 2010 that Cosan’s purchase of raw materials from indigenous areas demonstrates its lack of social and environmental criteria for selecting suppliers, and disrespect for the second largest indigenous population of the country. The Santa Claudina farm is owned by a state representative of Mato Grosso do Sul, Zé Teixeira. Cosan has confirmed that one of its suppliers operates in the region.

According to satellite images of the Brazilian Institute for Space Research (INPE), sugarcane plantations occupy already half of the indigenous territory Guyraroká. Since there are 26 “owners” of farmland within Guyraroká, there could be more suppliers to Cosan.

The indigenous territory Guyraroká, comprising over 11.000 hectares, was traditionally occupied by Guarani-Kaiowá Indians. According to the Brazilian constitution and United Nations conventions the land is theirs.

In October 2009, the Brazilian Ministry of Justice produced a directive as a step forward to final demarcation. The next steps for the Ministry are the administrative demarcation of the area and the withdrawal of the current occupants of the area. A signature by the Brazilian President, Ms Dilma Rousseff, is needed to make the demarcation definite. Generally, however, the demarcation process moves at a very slow pace. Moreover, the current occupants of the land are not likely to leave without resistance, be it in court or in the area itself. Violence by land occupiers and discrimination against the Guarani-Kaiowá Indians are frequently performed in Mato Grosso do Sul state.

Guyraroká is just one of the indigenous territories within the Central-South region of Mato Grosso do Sul, that has experienced serious delays in being demarcated. Dozens of Guarani-Kaiowá groups are waiting for their right to plots of land. Some 30,000 Guarani-Kaiowá live in Mato Grosso do Sul state. In the past they were pushed off their land and into reservations. Today, these reservations are severely overcrowded. The communities subsist mainly on government food aid. According to the federal public prosecutor of Mato Grosso do Sul, Dr Marco Antonio Delfino de Almeida, “the demography is comparable to being imprisoned in spaces so small that social, economic and cultural life are impossible to sustain.” In a 2009 report on Brazil, the UN Special Rapporteur on the situation of human rights and fundamental freedoms of indigenous people, mister James Anaya, wrote that Mato Grosso do Sul “has the highest rate of indigenous children’s death due to precarious conditions of health and access to water and food, related to lack of lands.”

Sugarcane plantations are arising rapidly in Mato Grosso do Sul. The state area cultivated for sugarcane harvest amounted to 502,000 hectares during the 2010/11 season. For the 2005/06 season the figure stood at 160,000 hectares. Both Cosan and the Brazilian government havosane identified the Central-South region of Mato Grosso do Sul as one of the main areas for future growth. This is the same area as where dozens of different Guarani-Kaiowá groups are claiming plots of land.

A further extract from this section of the report will be published in the coming days:

“Cosan’s short-lived inclusion into the “dirty list” of slave labour”

THE COMPLETE 73 PAGE REPORT (with reference sources)

From pages 17, 18 & 19 of “Royal Dutch Shell and its sustainability troubles” – Background report to the Erratum of Shell’s Annual Report 2010

The report is made on behalf of Milieudefensie (Friends of the Earth Netherlands)
Author: Albert ten Kate: May 2011.

A Shell pesticide factory

For a decade or more, beginning in 1977, Shell produced organochlorine pesticides (aldrin, dieldrin, endrin etc.) and other pesticides at a plant located near Paulínia, about 125 kilometres north-west of São Paulo, Brazil. The plant covered approximately 40 hectares.78 Due to its severe health impacts, by 1990 the use of aldrin and dieldrin was totally banned in the USA and Brazil.

After negotiations starting in 1993, in 1995 Shell sold the Paulínia facility to the companies American Cyanimid and BASF. A sales condition was that Shell would assume legal responsibility for the pollution at the site. In 2000, BASF took full ownership of the facility.79 In 2002, BASF shut it down the facility after a ban by the Brazilian Ministry of Labour, in view of existing contamination and serious risks to human health.

Pollution at the factory site

There have been many cases of pollution at the factory site: − Between 1998 and 1985 three leaks in a waste-water storage tank were officially reported. − Over the years, CETESB (São Paulo State Environmental Protection Agency) had issued three warnings that the plant’s incinerator was not operating within acceptable standards. − March 2001, the Justice Department listened to the testimony of a former company employee, Antonio de Marco Rasteiro. He confirmed the existence of four clandestine landfills inside the plant area, and accused Shell of dumping ash from its incinerator and waste from its manufacturing process in these landfills. He also confirmed that Shell’s incinerator sold its services to third parties, for example to DuPont. He also reported that drums with toxic wastes were buried in other areas inside the plant.

Pollution spreading across farmlands

Later, several studies of the area revealed that the contamination had moved into the groundwater under the farms located between the plant and the Atibaia River. For example, in February 2001, the Dutch environmental consulting company Haskoning/Iwaco, hired by Shell, produced a technical report with soil and groundwater analysis in nine sites located in the farms near the industrial site. Levels of contamination by dieldrin as high as 17 parts per billion (ppb) in soil and 0.47 ppb in water were found. The water contamination levels were higher than the levels allowed by Brazilian law (Administrative Rules 36/1990 and 1469/2000 – Ministry of Health – Highest Permissible Level: 0,03 ppb of dieldrin). However, no decontamination work had begun in the area. In February 2001, Shell admitted that it had contaminated the groundwater and sections of the nearby community, and was ordered by CETESB to begin a clean-up.

Pollution creating severe health problems

Both aldrin and dieldrin are highly toxic to humans, the target organs being the central nervous system and the liver.83 A report at the request of the Paulínia local government, produced by August 2001, showed that 156 of the 181 examined residents living near the factory had some degree of contamination from metals or pesticides which could result in various cancers, liver disorders, or neurological problems. Shell dismissed the Paulínia report, saying it used very low thresholds to measure contamination compared with those recommended by the World Health Organization. Shell also claimed its own tests showed no human contamination. “If there is proof of contamination with the products that we handled there, we will assume the responsibility immediately, which is our policy worldwide,” said Jose Cardoso, a Shell manager in Brazil. “But so far, there is no data indicating that.”84 Maria Lucia Braz Pinheiro, vice president of Shell- Quimica for Latin America, described the report as “another report with technical inconsistencies and lacking a scientific base.”

In a doctoral dissertation approved in February 2005, an analysis was made on the existing health data from a group of 62 former Shell/Cyanamid/BASF workers. Three cases of thyroid cancer were confirmed. The author concluded that the incidence of thyroid cancer among the estimated 1,120 workers of Shell/Cyanamid/BASF was 166 times greater than the incidence in the male population of Campinas, a county within Sao Paulo state. The chance of finding three cases of thyroid cancer out of a random selection of 1,120 men living in Campinas would be less than 1 out of 1,000,000.

At the beginning of 2009, it became publicly known that the Center for Excellence in Occupational Health (Cerest) of Campinas had examined 69 former employees of Shell / Cyanamid / BASF. Ten malignant cases of cancer to the prostate and thyroid were diagnosed. There was also a case of myelodysplastic syndrome (MDS, formerly known as “preleukemia”). There were 34 cardiovascular diseases, of which 21 related to hypertensive heart diseases. There were also an unspecified number of liver diseases. In 30 cases there was a prevalence of repetitive strain injury (RSI). In total 56 ex-workers had serious problems with reproductive organs and the urinary system, with prostate disorders, changes in fertility and impotence.

August 2010: Shell/BASF ordered to pay severe fine

In 2007, the public prosecutor Ministério Público do Trabalho (MPT) filed a case to ensure funds for health treatment of former employees, along with compensation for damages. The Association of Workers Exposed to Chemical Substances (ATESQ) and another union of workers had also filed a case against Shell and BASF. ATESQ was created by Antonio de Marco Rasteiro, a former employee of the Shell/BASF plant in Paulínia. He worked there for 21 years. In his role as ATESQ Coordinator, Mr Rasteiro has led the struggle of nearly a thousand former workers. In November 2009, he won the International Health & Safety Award of the American Public Health Association.

In August 2010, a Brazilian court (Tribunal Regional do Trabalho de Campinas) ruled that Shell and BASF should assume responsibility for the medical treatment of all former employees of the Paulínia facility, and pay a total of 1.1 billion Brazilian Real (about EUR 490 million89) in connection with the More than 1,000 former employees of the companies were covered by the court order, and also the children of employees who were born during or after services and independent contractors.

Some extracts from the court ruling in August 2010: − “Workers were constantly exposed to harmful substances in water and air, without any use of protective clothing. This exposure took place during and after work, during breaks, in the vicinity of the site, as well as through the use of water on site. Therefore, the simplistic explanation of Shell that the presence of harmful substances in the bodies of the workers do not constitute evidence of intoxication is unacceptable”

− “(…) Although it is not certain that all employees will develop diseases such as cancer, it is not excluded. Certainly it has been determined that among the employees exposed to the pollutants, cancer occurs much more frequently than normal.” − “(…) The most shocking is that the accused companies, especially Shell, were since 1970 fully aware of the harmful effects of substances used by them. After the production was banned in the U.S., Shell coolly moved its plant to Paulínia. BASF also has not taken precautionary measures: it was aware of the pollution at the site, which was already raised and well known in Paulínia. Nevertheless, BASF located itself in the same place, in the full knowledge that this place was not appropriate, with the result that its employees were exposed to obvious risks”.

Shell and BASF appealing

Soon after the court order in August 2010, Shell and BASF announced that they would appeal the decision. “We expect that the Brazilian courts at a higher level will eventually establish that we were not responsible for alleged health impacts and other claims”, a Shell spokesman told press agency Reuters.

Jennifer Moore-Braun, a spokeswoman for Basf told press agency Bloomberg: “We are of the opinion that the environmental damage was caused by Shell, and we will appeal the decision.” Shell was quoted saying: “We are convinced there is no link between our operations and injury to people’s health based on blood tests of local residents, medical assessments of former workers and expert medical opinions.”93 In April 2011, the Tribunal Regional do Trabalho de Campinas denied an appeal filed by Shell and BASF against the decision, and maintained the sentence. Shell and BASF may appeal the decision at the Superior Labour Court (TST) in Brasilia.

THE COMPLETE 73 PAGE REPORT (with reference sources)

This article should be read in conjunction with a related article published earlier this month:

Brazilian Indians demand Shell leave their land

SURVIVAL INTERNATIONAL PRESS RELEASE September 13, 2011

Survival has received reports that truckloads of armed men are violently driving Brazil’s Guarani from their land, leaving them in fear of their lives.

Guarani anthropologist Tonico Benites told Survival, ‘People’s lives are in imminent danger. A child could die at any moment.’

Benites reported that his uncle was left blind in one eye following a recent attack on the Guarani communities of Pyelito Kuê and M’barakai, south of the Brazilian Amazon.

Those caught up in the violence have described how they were forced to run to safety after their huts were set alight, clothes burnt and families threatened.

One Guarani man recounted, ‘Small lamps and torches were flashing in all directions, and the children and elderly people could not run. There are tears in my eyes as I write this. We have almost no more hope of surviving in this Brazil’.

Gunmen are reported to have blocked roads, destroyed a bridge that provided access to the Indians’ camp, and surrounded the Guarani, preventing food and medical supplies from reaching them.

This is one of a series of attacks on these Guarani since the beginning of August 2011. It follows attempts by the Indians to reclaim their ancestral land, which was seized by ranchers in the 1970s and has been occupied ever since.

The Guarani also faced persecution in 2003 and 2009 when they made similar moves to reoccupy their land.

Survival’s Director Stephen Corry said, ‘It’s shocking that the Guarani should be repeatedly persecuted for attempting to return to land that is rightfully their own. The Brazilian government needs to act swiftly before more innocent lives are lost.’

Brazil’s government has condemned the violence. Survival has written to the Inter-American Commission on Human Rights (IACHR) calling for urgent measures to be taken to protect the Guarani, and to Brazil’s Ministry of Justice, urging that Guarani land is mapped out and protected, as set out in Brazil’s own constitution.

SOURCE

For more information and images, please contact Chloe Corbin:

T (+44) (0)20 7687 8734 or (+44) (0)7504543367
E c.corbin@survivalinternational.org
W http://www.survivalinternational.org/

In the US:

Christina Chauvenet
T (+1) 202 525 6972
E cc@survivalinternational.org

Survival’s Director, Stephen Corry, said today, ‘It’s a sad irony that people buy Shell’s ethanol as an ‘ethical’ alternative to fossil fuels: there’s certainly nothing ethical about its horrendous treatment of the Guarani.

Guarani man. Shell is using sugarcane planted on Guarani land. © F. Watson/Survival

Indians of the Guarani tribe in Brazil have demanded that energy giant Shell stop using their ancestral land for ethanol production.

Ambrosio Vilhalva, a Guarani man from one of the communities affected, told Survival, ‘Shell must leave our land… the companies must stop using indigenous land. We want justice, we want our land to be mapped out and protected for us’.

Shell is united with Brazilian ethanol company Cosan, in a joint venture company called Raizen. Some of Raizen’s ethanol, sold as a biofuel, is produced from sugarcane grown on the Guarani’s ancestral land.

In a letter to the companies, the Indians warn that, ‘Since the factory began to operate, all our health has deteriorated – children, adults and animals’.

The chemicals used on the sugarcane plantations are thought to be causing acute diarrhoea amongst Guarani children, and killing fish and plants.

The Guarani state, ‘We can no longer find many of the medicines which used to grow in the forest… the plants have died because of the poison’.

They continue, ‘The growers never asked our permission or consulted us before planting on our land’.

Download the Guarani’s letter (pdf, 266 kb).

The Brazilian government’s failure to uphold its own laws and map out and protect the Guarani’s land for their exclusive use has left it vulnerable to exploitation by sugarcane plantations.

Meanwhile, many Guarani live in appalling conditions, in overcrowded reserves or camped on roadsides.

Dozens of Guarani have been assassinated after trying to reoccupy their ancestral land, and many more subjected to violence. The Guarani of Pueblito Kuê are the latest to suffer attacks, since they reoccupied their land last month.

Survival’s Director, Stephen Corry, said today, ‘It’s a sad irony that people buy Shell’s ethanol as an ‘ethical’ alternative to fossil fuels: there’s certainly nothing ethical about its horrendous treatment of the Guarani. The Brazilian government needs to enforce its laws, and stop the wholesale destruction of the Indians’ land’.

Download Survival’s report to the UN, about the Guarani’s desperate situation (pdf, 2.4 MB)

The current boom in sugarcane production is taking over the Guarani’s ancestral land.
© S. Shenker/Survival

SOURCE ARTICLE