Transocean Suspension “Unjustified”

A vessel works to clean up oil following the Frade Oil Spill in November.

SAO PAULO–The head of Brazil’s national petroleum agency, ANP, said Thursday a court order for Transocean Ltd. (RIG) to suspend operations in the country wasn’t justified.

Magda Chambriard, head of the ANP, said during a Senate hearing that irregularities in the company’s activities found by a Brazilian court were “light” and they “weren’t reason for the discontinuing of the company’s operations,” according to comments posted on the Senate’s website.

A Brazilian court on Wednesday ordered Chevron Corp. (CVX) and Transocean to halt their activities in Brazil in 30 days or face daily fines of 500 million Brazilian reais ($250 million). The court decision is part of ongoing cases related to a drilling accident last November at the Chevron-operated Frade offshore oil field. The accident caused an estimated 3,700 barrels of crude to seep from cracks in the seabed. Chevron voluntarily halted production at the field in March, when a second set of seepage was discovered at the field.

Transocean said in a statement, “We welcome the ANP’s comments and reiterate that Transocean crews acted responsibly and quickly, following the highest industry standards.”

The company said it will challenge the court decision and that its rigs continue to operate in Brazil.

While disagreeing with the court’s decision relative to Transocean, Mrs. Chambriard said Chevron could have avoided the accident “if the company had followed ANP’s norms for operational safety.”

In a statement late Thursday, the ANP said it would review the court’s decision to determine if it requires any action from the agency.

While the injunction could complicate Chevron’s efforts to get production at Frade restarted, it would likely have a greater impact on Transocean, which operates 10 drilling rigs in Brazil, including seven for state-run energy giant Petroleo Brasileiro (PBR, PETR4.BR). Transocean also has single rigs leased out to Eni SpA (E, ENI.MI), BP PLC (BP, BP.LN) and Vanco.