ANP: Chevron Unprepared to Fulfill Emergency Plan

RIO DE JANEIRO (Dow Jones Newswires), Nov. 21, 2011

The Brazilian unit of U.S. oil major Chevron was not prepared to carry out the emergency plan approved by local oil regulators during the recent spill at the company's offshore Frade field, the president of Brazil's National Petroleum Agency, or ANP, said Monday.

"We approved an emergency plan, and they were not prepared for this type of emergency plan," said Haroldo Lima, president of Brazil's primary regulator for the oil and natural gas industry. Specifically, Chevron was not ready to cement the well that was the primary source of the leaking oil, something that ANP demands, Lima said.

Chevron will face at least three "notices of infraction," including one for the ill-prepared emergency plan, Lima said. The notices will be issued Monday by the ANP, and will not substitute for a larger infraction or penalty at a later date, he added.

The ANP is monitoring 28 points along nine fissures that leaked oil, with only one of the 28 leaking "residual" oil, Lima said. While the ANP considers the oil spill under control, Lima said because some of the monitoring sides still had drops of oil, the regulator did not consider the seepage "completely controlled."

The latest estimate for the oil spill pegs the volume of oil that leaked into the Atlantic Ocean off Brazil's coast at 3,000 barrels of crude over eight days, Lima said. The total area affected by the spill is estimated at 160 square kilometers.

Chevron could face a maximum fine of 50 million Brazilian reais, or about $28 million, from the ANP for its role in the oil spill, Lima said. But the total does not include any fines from environmental regulators or other agencies. "It's safe to say that this will generate a heavy fine for who caused the problem," Lima said, adding that the calculation of possible fines will take some time.

Copyright (c) 2011 Dow Jones & Company, Inc.


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