Chevron: Brazil Govt Has Not Advised Deep-Water Status Under Review

RIO DE JANEIRO (Dow Jones)–Brazilian regulators have not advised U.S. oil major Chevron Corp. (CVX) that its license to drill in ultra-deep waters is under review or could possibly be revoked because of an offshore oil spill the company caused earlier this month, the company said late Tuesday.

Late Monday, government officials had suggested that the company could lose its status as a Class A operator. The Class A designation allows Chevron to operate in deep waters off the coast of Brazil that could potentially hold billions of barrels of untapped crude.

“We have not received any official notice from the appropriate governmental authority regarding our Class A status and we continue to fully inform and work with Brazilian government agencies and industry partners,” spokesman Scott Walker said in an email.

In addition, Chevron already has all necessary approvals and permits for a pre-salt exploration well at the Frade field, where the company and regulators believe between 2,400 barrels and 3,000 barrels of crude leaked into the Atlantic Ocean.

Chevron also reacted to charges made by the country’s leading oil regulator, Brazil’s National Petroleum Agency, or ANP, that it had edited 24-hour video of the seabed where the crude was seeping into the ocean. According to Walker, the size of the video files required the company to cut the video into segments that could be more quickly given to regulators.

“Chevron has not changed any video images,” Walker said.

Chevron also said that all equipment necessary to cement the appraisal well that was the primary source of the leak was in Brazil at the time the ANP approved an emergency well-abandonment plan. ANP President Haroldo Lima said that one specific piece of equipment was not brought into Brazil until Sunday.

“The first plug was set with equipment and material that was in country and under contract to Chevron,” Walker said. “In addition, as a precaution, Chevron mobilized additional equipment from outside the country as a backup contingency measure.”

The two notices could each carry a maximum fine of 50 million Brazilian reais ($28 million), according to the ANP. That would be in addition to the BRL50 million fine already levied by Brazil’s leading environmental regulator. Total fines could reach up to $139 million. Despite the accident and political fallout, Chevron is in Brazil to stay, Walker said.

“Chevron Brasil [the company’s local unit] is an important part of Chevron’s worldwide portfolio,” Walker said.

-By Jeff Fick, Dow Jones Newswires