Bloomberg News

Chevron, Transocean Spill May Trigger Fines, Bans in Brazil

November 23, 2011

(Adds Brazil regulator saying Chevron edited video and withheld information in fifth paragraph.)

Nov. 21 (Bloomberg) -- Transocean Ltd., the operator of the rig that exploded in the Gulf of Mexico and caused the worst U.S. maritime spill, and Chevron Corp. may be banned from deep- water drilling in Brazil after an oil leak.

Chevron, which was fined 50 million reais ($28 million) by Brazilian environmental authorities, may lose the right to develop deep-water fields there and be ordered to pay as much as 100 million reais to the regulator, Haroldo Lima, the head of the agency, said. The regulator may also ban Transocean, Lima said. Rio de Janeiro state may claim another 100 million reais in damage, Rio Environment Secretary Carlos Minc said.

“If we have reasons to do this, we will,” Lima told reporters in Sao Paulo today, referring to a possible downgrade of the “class A” status that allows Chevron to drill in deep water. “It will depend on a detailed analysis.”

Drilling at Chevron’s Frade project in the Campos Basin off Rio’s coast triggered a leak of as much as 3,000 barrels in eight days, Lima said. The spill followed a surge of pressure from an oil reservoir on Nov. 7, George Buck, San Ramon, California-based Chevron’s head of operations in Brazil, said in Rio yesterday.

Edited Images

Chevron edited video images that should have been made available in their entirety to Brazil’s oil regulator ANP, director Magda Chambriard said at a press conference in Brasilia.

“The company’s treatment of the regulatory agency and the Brazilian government was unacceptable,” Chambriard said. “We had to go aboard the platform to search for the original images even after the company was notified to provide us with the video.”

Transocean, which owned the rig involved in the 2010 blowout of BP Plc’s Macondo Well in the Gulf of Mexico, will be banned from operating in Rio state, Minc said. More than 80 percent of Brazil’s crude is produced in Rio’s Campos Basin.

“Transocean continues to fully cooperate with Chevron, the operator of the well, and Brazilian authorities in all aspects of this matter,” Guy Cantwell, a Houston-based spokesman for Transocean, said in a telephone interview.

Violations

Chevron may be fined by the oil regulator, known as ANP, as early as today for inadequate equipment and withholding information, Lima said. Each violation may cost the company 50 million reais, he said.

“Chevron’s situation to obtain licenses to operate in Brazil became more difficult after what happened,” Lima said in Brasilia.

Chevron has taken full responsibility for the spill and brought it under control as fast as it could amid stormy weather in the region, Buck said.

“The moment the seeps were first identified, we immediately activated our emergency response plan and began dispatching necessary resources to safely manage the situation,” Lloyd Avram, a Chevron spokesman, said in an e- mailed statement.

Halted Flow

The company has halted oil flow from the reservoir and reduced the amount seeping from fissures in the ocean floor near the drilling site, Buck said. Transocean wasn’t responsible for the leak and acted quickly to help block it, he said.

Chevron is the third-largest oil producer in Brazil, behind state-controlled Petroleo Brasileiro SA and Royal Dutch Shell Plc. Frade was Brazil’s eighth most productive field in September with 75,000 barrels a day of oil production, according to the website of the country’s oil regulator.

Transocean has 10 rigs operating in Brazilian waters, including the Petrobras 10000, a 2-year-old vessel designed to drill seven miles beneath the sea surface and withstand 47-foot waves.

Chevron fell 2 percent to $95.90 at 3:53 p.m. in New York. Transocean dropped 3.6 percent to $45.75.

--With assistance from Adriana Brasileiro, Peter Millard and Juan Pablo Spinetto in Rio de Janeiro, Joe Carroll in Chicago and Carla Simoes in Brasilia Newsroom. Editors: Charles Siler, Andrew Hobbs

To contact the reporters on this story: Rodrigo Orihuela in Buenos Aires at rorihuela@bloomberg.net; Katerina Petroff in Sao Paulo at kpetroff@bloomberg.net

To contact the editor responsible for this story: Dale Crofts at dcrofts@bloomberg.net


Too Cool for Crisis Management
LIMITED-TIME OFFER SUBSCRIBE NOW
 
blog comments powered by Disqus