ANP: Chevron Needs to Show it Can Prevent Spill before Resuming Drilling

HOUSTON - Chevron Corp. won't be allowed to resume drilling in its Frade field offshore Brazil until it finds the cause of two recent oil spills in the area and shows the Brazilian government it can prevent another oil spill from happening, the head of Brazil's oil regulatory agency said Monday.

Chevron "has not identified yet the real cause of the problem," Magda Chambriard, president of Brazil's national oil regulator, ANP, told reporters on the sidelines of the Offshore Technology Conference in Houston. "The report we have [from Chevron] says that it is due to natural causes and natural causes can happen again."

Chevron's spill was smaller than the massive April 2010 Deepwater Horizon leak in the Gulf of Mexico, but that doesn't mean it wasn't a large spill or a major problem for Brazil, Chambriard said.

"It was a real disaster," she said. The incident resulted in the spill of 3,600 barrels of oil, she added.

The Brazilian government is in talks with Chevron and is conducting an investigation into the causes of the spill and it is "confident it can reach an agreement with Chevron," Chambriard said.

To prove that Brazil is not being especially tough on Chevron because it is an international company, ANP plans "to be even harder" with Brazil's state-run energy giant Petroleo Brasileiro SA (Petrobras), which is Chevron's partner in the field.

Chevron shut down operations at the Frade field in March to better study the geology of the area, which has come under scrutiny because of a series of oil seeps from the seabed.

Chevron is lead operator of Frade, which holds estimated recoverable reserves of between 200 million and 300 million barrels of oil equivalent, with a 51.7% stake.

Petrobras holds 30%, while the Frade Japao Petroleo Ltda. consortium has the remaining 18.3% share.

Copyright (c) 2012 Dow Jones & Company, Inc.


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