Petrobras Oil Spill Update: Industry Executives Await Official Response from Brazil

dynamic producer
Dynamic Producer, image (c) N. Castro

RIO DE JANEIRO (Dow Jones)–Brazilian state-run energy giant Petroleo Brasileiro (PBR, PETR4.BR), or Petrobras, said Tuesday that an accident at an ultra-deepwater oil field off Brazil’s coast spilled an estimated 160 barrels of crude into the Atlantic Ocean.

It’s another setback for Brazil’s oil industry, which is gearing up to exploit massive discoveries in some of the most challenging environmental conditions on earth. Industry executives will also be keen to see the official response, given the heavy-handed response to an earlier problem in November at a field operated by Chevron Corp. (CVX).

The latest spill happened at the Carioca Nordeste field, part of a cluster of oil discoveries made more than four miles deep off the coast of Brazil’s Rio de Janeiro and Sao Paulo states. Safety systems aboard the “Dynamic Producer” FPSO, a floating production, storage and offloading vessel conducting a long-duration test, detected the rupture at 0830 local time on Tuesday, Petrobras said.

The safety systems automatically shut down the well, which remains closed and in safe condition, Petrobras said. An investigation into the incident is already under way, the company said.

Brazil’s oil regulator ANP said late Tuesday it designated a team that will start inspecting the ruptured production column on Wednesday. The pre-salt well linked to the column has been closed, containing any leakage, ANP confirmed in a statement.

The oil spilt is unlikely to reach the Sao Paulo coast 250 kilometers away, ANP said, adding that efforts are under way to contain the oil slick.

The accident was reported to oil regulators, Brazil’s Navy and environmental authorities, Petrobras said. The company has already mobilized “all of the resources necessary to collect oil from the sea and residual oil from the upper part of the column.”

In November, some 2,400 to 3,000 barrels of crude spilled into the Atlantic after a problem at Chevron’s Frade field in the Campos Basin. Chevron was heavily criticized by regulators and government officials, and criminal charges may be leveled against company executives. Environmental regulators have already imposed fines of more than $30 million, while a state prosecutor has filed a lawsuit seeking damages in excess of $10 billion from Chevron, its Brazilian unit and rig operator Transocean.

Chevron was also barred from drilling offshore Brazil, although the company continues to produce oil from the Frade field.

Last week, Petrobras’s Transpetro logistics unit also was forced to clean up a beach in southern Brazil after 7.5 barrels of oil spilled during offloading of a tanker ship at a single buoy. Brazil’s National Petroleum Agency, or ANP, is investigating the spill.

Petrobras shares closed trading stable at BRL24.57 on the Sao Paulo stock exchange.

-By Jeff Fick, Dow Jones Newswires, Diana Kinch contributed to this article