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Chevron oil spill a wake-up call for Brazil: analysts
by Staff Writers
Rio De Janeiro (AFP) Nov 24, 2011

An oil spill off Brazil's coast is a wake-up call for the country's ability to deal with major oil emergencies as it prepares to tap potentially huge deep-water reserves, analysts said.

US oil giant Chevron Corporation said Thursday it had suspended its current and future drilling operations off Rio de Janeiro state after the oil slick traced to a 1,200-meter (4,000-foot) deep well it operated.

Brazilian authorities say the spill is now under control and that the spill has been reduced to two square kilometers (0.8 square miles).

"This is a wake-up call for us. Today, only one well is involved. The 'subsalts' (deep-sea reserves) will have 1,000. We must draw the lessons," Rio state's environment secretary Carlos Minc told foreign reporters Wednesday.

The subsalt fields, which national oil agency ANP says have reserves that could surpass 100 billion barrels of high-quality recoverable oil, are off the country's southeast Atlantic coast beneath vast expanses of ocean, bedrock and hot salt beds.

Brazilian authorities want the Chevron accident to serve as an example and the firm now faces a slew of fines from federal and Rio state authorities that together could exceed $145 million.

"The law allows foreign firms to search for and to tap the oil. But we are not a Banana Republic... We are the world's seventh-biggest economy and we want technologies" that provide increased protection, Minc said.

On Wednesday, Brazil suspended Chevron's drilling rights nationwide until safety conditions have been restored and it identifies the cause and culprits of the spill.

It also turned down the company's request to tap the subsalt deep-sea reserves.

"The Chevron accident shows that it is not easy to extract oil from the sea," said Adriano Pires, head of the Brazilian Infrastructure Center.

Currently, 80 percent of world oil production comes from land. But offshore output is steadily increasing.

"Brazil is the country were offshore production is the highest (95 percent of the total) and this will go even higher with subsalt" mining, said Pirest.

"Neither Brazil nor the rest of the world are prepared to respond quickly to an oil accident at sea. And with the subsalt, the problems will be worse because of the depth of the fields."

Those fields can be 5,000 to 7,000 meters (16,400 to 23,000 feet) deep.

Companies such as Brazil's Petrobras, a world leader in deep-water drilling, have developed sophisticated means to extract the oil, but procedures to cope with an oil spill and protect the environment "leave much to be desired," he added.

"To plug a leak or collect the oil takes time. Companies and government will have to exchange information on how to act," Pires said.

"To transform oil into wealth is not easy and is expensive," he noted, recalling that "Chevron shares have dipped 12 percent in the past few days while those of BP plummeted 20 percent last year."

But missteps can cause serious damage and even be fatal, such as the BP oil disaster in the Gulf of Mexico last year that killed 11 workers and triggered the worst oil spill recorded in the United States.

Alessandra Magrini, an energy planning professor at Rio Federal University (UFRJ-Coppe), told AFP that oil legislation was "too generic" and urged officials to "better prepare" oversight bodies such as ANP, the environment ministry and the Navy to react quickly to an accident.

Petrobras has state-of-the-art equipment to deal with accidents at sea, including a remote-controled underwater robot, but Magrini said supervisory agencies must be able to rely on real-time information and need more effective coordination.

"The national emergency plan was not activated. Criteria were set for fines but none exists to assess the damage caused," she added. "Brazil still has work to do ahead of subsalt mining."

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Chevron suspends Brazil offshore drilling
Brasilia (AFP) Nov 24, 2011 - US oil giant Chevron Corporation said Thursday that it had suspended its current and future drilling operations off Rio de Janeiro state, following a crude oil slick in the area.

The company said in a statement that while its Brazilian subsidiary had not received formal notice from the national oil agency of an order to stop offshore drilling it had decided to do so.

"The suspension is indefinite," it said, noting that the area affected included the company's permitted wells in the Frade field, part of what is known as Brazil's potentially massive 'sub-salt' oil reserves.

On November 8, a helicopter from Brazil's state-owned oil company Petrobras spotted a slick and the leakage was traced to a well operated by Chevron 1,200 meters (4,000 feet) deep near the Frade field, 370 kilometers (230 miles) off the Rio de Janeiro coast.

The national oil agency ANP said Wednesday that Chevron Brazil's activities would be suspended until "the cause and those responsible for the spill have been identified and safety conditions have been restored in the area."

Brazilian authorities say the spill is now under control and that the oil slick has been reduced to two square kilometers (0.8 miles).

George Buck, president of the subsidiary Chevron Brasil Upstream Frade, apologized to deputies and the country for the oil slick.

"I would like to reiterate that we have deep respect for Brazil, for the Brazilian people, for the environment, for the laws and institutions of this country," he said.

"We are going to thoroughly investigate the accident and present the results to the Brazilian people ... so that this does not happen again, either here or in any other part of the world," he added.

Chevron faces a slew of fines from federal and Rio state authorities that together could exceed $145 million.

Buck on Monday said 2,400 barrels of oil had seeped into the ocean between November 8 and 15 but ANP and a non-governmental organization respectively reported 3,000 and nearly 30,000 barrels.


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