Brazil Suspends Chevron’s Oil Drilling Activities

Posted November 23rd, 2011 at 6:00 pm (UTC-5)
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Authorities in Brazil are suspending the oil drilling activities of U.S. energy giant Chevron following a recent oil spill off Rio de Janeiro state.

The country’s National Petroleum Agency made the announcement Wednesday, saying Chevron is banned from drilling until the causes of the leak are fully known.

The decision comes two days after Brazil fined Chevron $28 million in connection with the spill and said the company could face more fines in the coming days. Brazilian officials also say the national government will ask Chevron to pay for damages caused by the spill near the Frade oil field. Chevron was drilling an appraisal well about 370 kilometers off the northeastern coast of Rio when the spill occurred.

The company’s top official in Brazil, George Buck, Wednesday apologized to lawmakers for the leak, which regulators say is now under control.

Chevron has said it underestimated the pressure in the reservoir being targeted. Chevron has taken responsibility for the leak, saying the problem was discovered November 8 and the situation brought under control a few days later. Chevron, however, has rejected accusations it did not notify local authorities quickly enough or properly manage the cleanup.

It is estimated the leak caused 200 to 300 barrels of oil per day to seep into the Atlantic Ocean over a period of about one week.