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Chevron Appeals Injunction Preventing it from Operating in Brazilian Waters

Following an oil spill last November, and then another leak in March, Chevron and its drilling contractor Transocean Ltd., were ordered to halt all operations in Brazil until civil and criminal charges are judged.

The companies are now contesting that injunction as they look to return to work in the Brazilian oil fields.

The accident caused about 3,000 barrels of oil, less than a thousandth the volume released during BP’s 2010 Deepwater Horizon spill, and was fully contained within four days.

Chevron released a statement saying that their “response to the incident was implemented according to the law, industry standards and in a timely manner. Monitoring of the incident area shows no discernible environmental impact to marine life or human health. No oil has reached Brazil's coast nor any other country.”

However the Brazilian federal prosecutor Eduardo Santos de Oliveira has called the incident one of the worst ecological disasters in Brazil’s history. It was he who won the injunction and is seeking the country’s largest ever civil damages. He is demanding $20 billion be paid, and has levied criminal charges against 17 Chevron and Transocean executives which carry jail terms of up to 31 years. Chevron argues that the proposed damages are excessive.

Chevron owns 52 percent of the Frade field, the location of the leak, with Brazilian state-owned Petrobras owning 30 percent, and the estra 18 percent owned by a group of Japanese energy companies.

Petrobras announced this week that it will support Chevron’s appeal, and that it does not agree with the court and prosecutors view of the spill.

Petrobras has reason to worry. If Transocean, the world’s largest operator of offshore drill rigs, are permanently banned from working in Brazilian waters, Petrobras would have to give up some of its most promising drilling stations. Transocean runs seven rig platforms for Petrobras off Brazil’s coast.

By. Charles Kennedy of Oilprice.com



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