Chevron fined $17.5 mn over Brazil oil spill

(RTTNews) – Brazil’s National Petroleum Agency -ANP, has imposed a fine of 35.1 million Brazilian real or $17.3 million on US oil giant Chevron Corp. over its role in causing an oil spill last year in the Campos Basin, off the southern coastal state of Rio de Janeiro.

According to news reports, the fine imposed on Chevron by the Brazilian oil regulator was disclosed by ANP Director Magda Chambriard on the sidelines of the Rio Oil & Gas 2012 conference on Monday.

Chambriard said the fine covered 24 of the 25 sanctions imposed on Chevron by the ANP earlier this year, and revealed that the penalty was imposed on the US oil giant by her agency last week.

She said the fine could be hiked by an additional 2 million Brazilian real, depending upon the remaining infraction. Noting that the remaining infraction covers the abandonment of a well, she added that a final decision would be taken on the issue in two months time.

The developments come after a major oil leak was discovered at the the Chevron-operated Frade offshore oil field last November. The leak resulted in an estimated 3,700 barrels of crude seeping into the Atlantic Ocean from cracks in the seabed.

Following an order in December from ANP, Chevron suspended water re-injection in four wells in the field. Although oil rig operator Transocean Ltd was later absolved of any wrongdoing by ANP, the two companies are facing several civil and criminal lawsuits related to the spill.

The US oil giant has already taken full responsibility for the November 7, 2011, accident and insists that it has contained the oil slick which was caused while drilling an exploratory well near the Frade field.

Chevron said the leak occurred after oil rushed up a bore hole and seeped into the surrounding seabed. The company acknowledged that it had underestimated the pressure of underwater oil deposits while conducting the drilling operations.

Notably, Chevron had halted operations at the Frade Field in March after “a small new seep” was identified. The company said then that the move was “a precautionary measure based on very recent information on a small new seep in the field and subsidence in the area.”

Subsequently, a Brazilian court imposed an operating ban on both Chevron and Transocean over the oil spills in late July, prompting the companies to launch a joint appeal against the court order. Although the ANP also appealed the ban citing economic reasons, Brazil’s Supreme Court overturned that appeal last week.

Frade field is the largest foreign-run oil field in Brazil and currently produces approximately 79,000 barrels a day. Chevron, one of the world’s leading integrated energy companies, has a 51.74 percent operating interest in the Frade Field. Other partners in the project are Petroleo Brasileiro S.A. – Petrobras, and Frade Japao Petroleo Ltd.

Article on RTT News, 17.09.2012

These funds and institutions are shareholders of Chevron according to Morningstar.