Chevron Oil Spill Hits Petrobras’ Bottom Line

RIO DE JANEIRO – Brazil’s state-owned energy giant Petroleo Brasileiro SA, or Petrobras, said Monday it will produce 2.02 million barrels of oil equivalent per day this year, somewhat less than last year, because of the spill at the frade field run by U.S. firm Chevron Corp.

Production “will remain in value around the 2011 production with (a variation) of more or less 2%,” Jose Miranda Formigli, head of Petrobras exploration and production, told a press conference.

“This year there is uncertainty as to a resumption of production at the (Chevron-operated) Frade field,” that leaked some 2,400 barrels in November, he added.

In March, an oil spill was detected at a depth of 1,300 meters in the Frade field, in which Petrobras has a 30% stake, not far from the site of the bigger spill that occurred in November.

State prosecutors have filed legal action against Chevron and the oil-drilling contractor Transocean over the November incident, seeking $11 billion for what they have called “immeasurable” environmental damage.

Police and prosecutors have concluded that the Frade spill was caused by an error on Chevron’s part.

The U.S. oil giant, which has suspended its drilling activities in Brazil since March, has denied the charges as “outrageous and without merit” and has vowed to challenge them in court.

Oil and natural gas production in Brazil last year reached an average daily record of 2.02 million boe/d, 1% higher than in 2010 but below the target set by Petrobras that hoped to reach 2.1 million.

Copyright (c) 2012 Dow Jones & Company

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