Wednesday, September 19, 2012

Brazil Oil Agency ANP Requests Revoking of Ban on Transocean (NYSE:RIG ) and Chevron (NYSE:CVX)

Brazil's petroleum regulator ANP has appealed to a court seeking an order that would revoke the ban placed on Transocean (NYSE:RIG ) and Chevron (NYSE:CVX) from operating in Brazil. ANP chief Magda Chambriard feels that oil exploration would suffer immensely due to the ban.

Another issue is that the ban, which might be valid in less than a month, will not allow state-led oil company Petrobras to drill 8 new wells in the huge Marlim field northeast of Rio de Janeiro. Chambriard stated that drilling and exploration of oil will be drastically reduced if the ban takes effect.

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A civil lawsuit was snapped on Chevron and its drilling contractor Transocean, by independent federal prosecutors. They are demanding about $20 billion in damages due to a 3,600 barrel oil spill in the offshore Frade field in November. The ban has resulted because of the lawsuit. 13% of Brazil’s total deep-water drill rigs are by Transocean out of which, 7 are under contract to Petrobras.

A Brazilian government oil official has bared his opinion that the ban and the amount being demanded as damages are unjust and without sufficient grounds and will only result in grave consequences. The ANP has only fined Chevron US $17.3 million for the spill as it feels that Transocean had no hand in it and it wants the ban on both firms removed.

ANP, Chevron and Transocean have previously appealed in courts in Rio de Janeiro but their motions were denied. This time they have filed their request ban to Brazil's Supreme Justice Tribunal, a federal appeals court one step below the Supreme Court.

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Petrobras chief executive officer Maria das Gracas Foster is worried about the production decline in spite of a $237 billion five-year investment plan and discoveries of new reserves. She feels it is due to the reduction of drill rigs. Petrobras accounts for 90% of the Brazilian output and has rig leases with BP Plc Vanco, a privately held U.S. oil company.

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