Brazilian prosecutors are suing oil company Chevron and oil rig operator Transocean to the tune of almost $11 billion. The suit aims to suspend both company’s operations after an eight-day oil spill near Rio de Janeiro in November leaked 3,000 barrels of oil into the Compos Basin.
The suit threatens to thwart the country’s plan to double its crude oil output over the next decade. Brazil relies on Transocean, which operates more than 15% of its oilrigs. Chevron, the second-biggest oil company in the US and third in Brazil after Petroleo Brasileiro and Royal Dutch Shell, fell 3% to just over $100.50 in New York following news of the case. Transocean fell almost 4% to just over $40.
Chevron owns almost 52% of Frade Field, around 1,130 meters below the surface, 230 miles from the Rio de Janeiro coast. The oil and gas field is believed to hold between 200 million and 300 million barrels of recoverable oil.
Petrobas holds a 30% stake in the field, and Frade Japao Petroleo holds just over 18%. The field’s daily output averaged over 75,000 barrels of crude oil and natural gas liquids in October, and is expected to remain operational for another 15 years.
Chevron also owns lubricants manufacturing factories in Sao Paulo and Rio de Janeiro. It remains to be seen if the two plants will be affected by the lawsuit.
Chevron was banned from drilling in Brazil by the National Petroleum Agency in November pending an investigation into the oil leak. The company received a $28 million fine, and it is yet to be seen whether it intends on contesting the fine.
Brazil’s Ministry of the Environment condemned Chevron for lacking the appropriate emergency equipment to handle the spill and for partly withholding information regarding the leak early on.
The company’s CEO of its Brazilian arm said the leak was due to an underestimation of the level of pressure in an underwater reservoir, which resulted in crude oil forcing its way through a borehole and leaking into the seabed through several cracks.
Chevron Finds Natural Gas Off Australian Coast
Elsewhere Chevron announced a natural gas find 185 miles from Exmouth off the west shore of Australia. The company drilled its Vos-1 well in 1485 meters of water and around 3800 meters deep. The region, which concerns almost 140 meters of gas in the Carnarvon Basin, brings Chevron’s offshore Australian discoveries to a dozen in two years.
Chevron’s Australian arm operates the WA-439-P permit area, holding a 50% stake; the other half is owned by Europe’s leading oil company Royal Dutch Shell. In addition, Chevron owns more than 75% of the near $30 billion Wheatstone project, also in western Australia.
Chevron is involved in the exploration, production and transport of natural gas and crude oil. It is also engaged in the distribution of energy products, including transportation fuels, power generation, the sale of petrochemical products and the development of energy resources such as biofuels.
Key Statistics – Crude Oil in Brazil (source: MarketLine)
- Brazil’s crude oil industry was worth almost $64 billion in 2010 after 13% yearly growth since 2006.
- Industry consumption grew at 6% yearly between 2006 and 2010 in terms of consumption, to reach almost 834 million barrels.
- Industry performance is expected to slow to just over 8% a year through 2015 to reach almost $95 billion.