Chevron Fined $27.6 Million for Brazil Oil Leak

on November 22 2011 4:10 PM

Brazilian officials late Monday have decided to fine Chevron Corp. for an oil leak caused by the drilling of an appraisal well off the coast of Rio de Janeiro.

The company is being fined $50 million reais ($27.6 million USD) and comes a day after the U.S. oil company announced it took full responsibility for the spill that was first reported early November.

The fine, levied on the company by the country's environmental protection agency, was to pay for environmental damages.

Government officials contend that roughly 3,000 barrels of oil leaked into the South Atlantic, while Chevron has said that only 650 barrels leaked from the ground.

Chevron officials said Sunday they expect to calculate the total volume of oil leaked in the next few days.

On Nov. 10, the company's appraisal well, which was drilling at a depth of 3,800 feet, cracked the ocean floor though which the oil to escape. Company officials explained they experienced an unexpected spike in pressure which caused the fissure.

Apart from the fine, Brazil officials could downgrade the company's standing, effectively prohibiting Chevron from further deepwater exploration, and further fine the company $28 million each for two other infractions that were reported by the country's petroleum authority, according to The Wall Street Journal.

Rio de Janeiro's state government could also impose its own fine.

Up to 18 vessels have been in rotating operation to support well plugging operations and sheen cleanup, said Chevron officials in an official statement released Sunday. The vessels are using oil response methods approved by the Brazilian government, such as deployment of containment booms and surface skimming. At no time has sand or chemical dispersants been used in the process.

As of Sunday, the oil sheen on the surface of the water was estimated at 18 barrels. It was also reportedly moving away from the Brazilian coastline.

On Thursday last week, Chevron officials announced they had successfully plugged the well and that oilflow from the cracks in the ground were significantly reduced.

A representative of Chevron was not immediately available for comment.

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