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Chevron Banned From Drilling In Brazil After Oil Spill

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Brazilian regulators banned Chevron from drilling in the country on Wednesday.  In a statement released late in the trading day, Brazil’s ANP (Agencia Nacional de Petroleo) announced Chevron was banned from drilling, particularly in its ultra deep water pre-salt fields, given the oil spill that occurred on November 9.

Chevron discovered that 2,400 barrels of oil had spilled into the Atlantic Ocean from ocean floor seeps in the vicinity of its Frade field.  In response, regulators decided to ban the American company from drilling in the area.  “ANP decided the suspension of all drilling activities at the Frade Field until the causes and those responsible for the oil spill are identified,” read the release.

ANP noted it had also rejected Chevron’s additional requests to drill in the Frade Field.  “[ANP] understands that drilling in pre-salt reservoirs comes with risks of identical nature as those occurred at the site of the oil spill, and even amplified by greater depth,” read the release.

Brazil’s pre-salt fields constitute the largest discovery of oil in recent memory.  Found in 2006, the formerly named Tupi Field is thought to contain about 8 billion barrels of recoverable oil.  Brazil’s pre-salt fields are essentially being managed by Petrobras, which is partially owned by the state.  But other companies have been drilling there, Chevron among them.

Chevron’s recent spill sparks memories of the brutal Gulf of Mexico oil spill, and highlights the dangers of ultra deepwater drilling.  An explosion at the BP-operated Deepwater Horizon caused the death of 11 men and a massive oil spill that took three months to stop, causing widespread environmental damage.

In a statement regarding the recent oil spill, Chevron noted its team acted “immediately” and went to great efforts to stop the source of the seep flow “within only four days of first detection.”

Brazilian authorities don’t seem to concur, though.  ANP noted it found negligence on Chevron’s behalf, while Brazil’s port secretary said Chevron could be fined up to $55 million for its infractions, according to Trade the NewsTransocean, which provided the drill rig, could also be banned in Brazil.

A video of the oil spill can be seen in Chevron’s media updates website, along with additional information; below is another video, produced by ANP and Chevron.  Shares in Chevron fell 2.8% on Wednesday, closing the day at $93.75.