ANP Fines Chevron for Offshore Brazil Oil Spill

RIO DE JANEIRO - Brazil's National Petroleum Agency, or ANP, has fined Chevron Corp. 35.1 million Brazilian reais ($17.3 million) for its role in an offshore oil spill last year, ANP Director Magda Chambriard said Monday.

The fine, which covers 24 of the 25 sanctions the ANP issued Chevron earlier this year, was handed down last week, Ms. Chambriard said on the sidelines of the Rio Oil & Gas 2012 conference.

The fine could be increased by up to an additional BRL2 million when a decision is made on the remaining infraction, Ms. Chambriard said. The remaining infraction covers abandonment of a well and should be decided in two months, she said.

Chevron said it has received the ANP's fine notice and will review the amounts with the ANP. The company's response to the oil spill "was implemented according to the law, industry standards and in a timely manner," Chevron said, adding that continuous monitoring of the area in the wake of the accident shows no impact on marine life or human health.

A drilling accident last November at the Chevron-operated Frade offshore oil field caused an estimated 3,700 barrels of crude to seep into the Atlantic Ocean from cracks in the seabed. Chevron and drilling company Transocean Ltd., which was absolved of any wrongdoing by the ANP, also face civil and criminal lawsuits related to the spill.

In addition, the two companies are appealing an operating ban imposed by a Brazilian court in late July. The ANP has also appealed the ban, claiming that it would cause safety issues and economic harm as well as usurp the regulator's jurisdiction over the local oil industry. Brazil's Supreme Court last week denied the ANP's appeal, but Ms. Chambriard said that the agency would appeal the ruling.

Chevron halted operations at Frade in March, when a second series of oil seeps was discovered. Despite troubles at Frade, the ANP has said that it would discuss restarting output at the field with Chevron.