Brazil Prosecutor Asks Chevron to Suspend Company Activities, Pay $10.7 Billion

 
on December 14 2011 4:55 PM

Brazil's federal prosecutor's office is asking Chevron to suspend all of its activities in Brazil and pay $10.7 billion in damages after a November oil spill, according to a statement sent to Bloomberg, the news service reported Wednesday.

The country's federal prosecutor is suing the U.S. oil major and Transocean, the operator of the Chevron oil rig that sprung a leak in early November off the coast of Brazil's Rio de Janiero state, reported Dow Jones Newswires.

According to the prosecutor's office, both companies were unable to control the damage caused by the spill of nearly 3,000 barrels of oil, which shows a lack of planning and environmental management by the companies, reported the Wall Street Journal.

Chevron, however, said it has not received notice of the suit.

Chevron has not received any formal notice of this action. Chevron also has not received any instruction from the regulatory agencies with oversight responsibility for our activities in Brazil regarding suspension of our operations, according to a statement released by the company.

Chevron maintains it stopped the leak within four days of it being reported, and the company continues to clean up the areas affected. It estimates there is less than one barrel of oil left on the surface of the water.

Guy Cantwell, a spokesman for Transocean said his company's rigs are still in operation.

We have not received a formal notice of this action, Cantwell said. At present, our rigs are operating in Brazilian waters and we continue to cooperate with the authorities.

The leak was caused when an appraisal well experienced a surge in pressure, resulting in a kick that fractured the ocean floor. Oil started seeping from the cracks.

Chevron was fined $28 million by the country's environment agency on Nov. 21, and was ordered to temporarily suspend its drilling operations while an investigation into the leak was conducted. The leak spilled roughly 2,640 barrels of oil, according to company estimates.

But while the Chevron leak was relatively minor compared with the BP blowout disaster in the Gulf last year, Brazil has come down hard on the company. If the $10.7 billion dollar fine is upheld in court, it will be the second fine the company will be required to pay.

On Dec. 1, Brazilian officials ordered the company to shut in one of its producing wells after the country conducted a safety audit of its facilities.

Four days later, Brazilian officials announced the company would have to leave the country if it fails to up hold the country's laws. Regulators also previously suspended the company's drilling rights.

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