Tuesday March 20 9:55 AM ET

Oil Rig Sinks Off Brazil's Coast

http://dailynews.yahoo.com/htx/ap/20010320/wl/brazil_oil_rig_6.html

By PETER MUELLO, Associated Press Writer

RIO DE JANEIRO, Brazil (AP) - An oil rig billed as the world's largest sank in the South Atlantic on Tuesday, and state oil company Petrobras raced to prevent 400,000 gallons of crude and diesel fuel still aboard from spilling into the sea.

The 40-story-tall rig, 75 miles off the Brazilian coast, was ravaged last Thursday by explosions and fire that killed at least two workers. Eight others were still missing and presumed dead.

The explosion knocked out a supporting pillar, and the platform tilted and sank slowly into the sea off the coast of Macae, 120 miles northeast of Rio.

Over the weekend, a team of navy divers, engineers and foreign consultants injected nitrogen into flooded compartments, partly righting it, Petrobras said.

But high winds and rough seas hindered efforts on Monday. Petrobras said the platform ``shifted suddenly'' early Tuesday morning, and workers gave up trying to save it.

``It's at the bottom of the sea,'' said Carlos Aurelio Miranda, a Petrobras spokesman.

Chief Executive Henri Philippe Reichstul said the oil and gas wells were sealed before the rig was evacuated, but the danger was that the oil still aboard could spill.

Petrobras had 13 ships stationed around the stricken rig with floating oil barriers to contain an eventual spill.

The rig, built in Italy and later modified in Canada, was the top producer in the oil-rich Campos Basin, which accounts for most of the 1.5 million barrels of oil Brazil produced daily. The platform was pumping about 83,000 barrels of oil and processing 1.3 million cubic meters of gas daily, but the company had plans to raise its production to 180,000 barrels a day.

Finance Director Ronnie Vaz Moreira said that with a total loss of production from the rig, Petrobras would lose $450 million this year. The loss also could hurt Brazil's trade balance, which has been stuck in the red for years.

The accident sparked criticism of Petrobras, which has laid off workers and raised profits to a record $5 billion last year. Critics say Petrobras is farming out jobs to less-qualified companies, which increases safety risks.

The oil rig disaster also has added to economic jitters and helped to push the Brazilian currency to two year-low. On Monday, it dipped to 2.17 to the dollar before recovering.

-- Swissrose (Cellier3@mindspring.com), March 20, 2001