Chevron Won't Be Expelled From Brazil Despite Oil Leaks

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Chevron Corp. ( CVX ) the second-largest U.S. oil company, will not be expelled from Brazil for sea pollution, a government official said Monday.

Chevron has been under tight scrutiny since November, when drilling caused 2,400 barrels of oil to leak from fissures on the Atlantic Ocean floor.

This month, the company reported another, much smaller leak. Regional executives face criminal charges in Brazil for their role in the November incident.

Chevron's Brazil chief George Buck and 16 other executives, including Transocean's ( RIG ) Brazil chief, are barred from leaving the country.

Each was ordered to post $550,000 bail, and both Chevron and Transocean, the operator of the rig that caused the first leak, must set aside $5.4 million to pay for future fines.

Prosecutors said the Chevron leak created "a prolonged contamination time bomb" that will hurt the local environment, Reuters reported.

Despite Brazil's stern response to both Chevron spills, Energy Minister Edison Lobao said neither spill was large enough to warrant the company's expulsion, UPI reported.

Contract Revocation

The minister's comments came after the country's oil regulator last week considered revoking Chevron's contract.

Chevron suspended its drilling operations following the second leak, which the company says is contained.

Chevron said last week it would defend itself and that the criminal charges against it are "outrageous."

"There is no technical or factual evidence demonstrating any willful or negligent conduct by Chevron or its employees associated with the incident," the San Ramon, Calif.-based oil driller said. "We have sought to perform our operations in full compliance with Brazilian laws and industry practices and to comply with all applicable licenses and authorizations."

The country's response to Chevron's incidents prompted fears that punishing the company will cool the industry's investments and stifle development of Brazil's vast offshore resources.

Brazil could have as much as 100 trillion barrels of oil yet to be discovered in offshore deposits, according to the U.S. Geological Survey.

The large finds are fueling an energy bonanza in the country. State-owned oil company Petrobras previously announced it was dedicating $500 billion to offshore oil activities.

Chevron shares Monday closed up $1.48 at $107.85.



The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Commodities

Referenced Stocks: CVX , RIG

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