Tuesday March 20 10:25 AM ET
World's Biggest Offshore Oil Rig Sinks in Brazil

By Denise Luna

RIO DE JANEIRO, Brazil (Reuters) - The world's largest offshore oil rig sank on Tuesday morning, sparking a race to contain environmental damage off the coast of Brazil five days after powerful blasts ripped through the rig killing 10 people, said an official with state oil giant Petrobras .

Petrobras did not have any information on whether there had been a large oil spill, but the company has ships standing by that it says should head off any oil slick, a spokeswoman said.

Up to 395,000 gallons of crude and diesel stored in underwater pipelines and onboard tanks could be dumped into the sea. That amount is just a fraction of 11 million gallons spilled by the Exxon Valdez supertanker into the Alaskan seas in 1989, the worst environmental disaster ever.

Environmental officials said they spotted some small slicks on Tuesday morning but they added the environmental risk would likely be minimal.

Three explosions blasted the 40-story rig off the coast of Rio de Janeiro state last week, killing 10 of the 175 workers aboard.

Petrobras flew in experts and equipment from around the world to try to keep the rig afloat, but early on Tuesday morning the rig listed even further and later in the morning plunged into the ocean in a matter of minutes.

Petrobras has said it has enough boats and absorption barriers to prevent a disaster, though environmentalists say it is impossible to know how serious damage will be.

``The concern is to get the absorption barriers around the oil ... and in these conditions we expect the environmental impact to be minimal,'' said Carlos Henrique Mendes of the environmental authority Ibama.

Non-governmental environmentalists were also not overly alarmed. ``It is not a biodiverse area, it is almost off the continental shelf,'' said Garo Batmanian, secretary general of World Wildlife Fund for Nature in Brazil. ``The current is also not bringing it to the coast.''

The platform was in the Roncador oil field 78 miles off the coast of Rio de Janeiro state in the Campos Basin, which provides 80 percent of Brazil's total oil.

The rig, which started operating last year, was pumping out 80,000 barrels per day of crude, or 5 percent of Brazil's total, and was expected to be producing 110,000 bpd by the end of the year. It had capacity to pump out 180,000 bpd, making it the biggest in the world.

Petrobras shares were down 2.5 percent at 49.80 reais after the company announced the rig had sunk. The P-36 rig cost $350 million and is insured for $500 million.

Engineers have said it would be virtually impossible to salvage the rig if it sank because the waters are so deep.

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