* Companies have 30 days to comply; Chevron to appeal
* Failure to comply carries fine $245 mln/day fine
* Transocean could lose $3.5 mln/day in leases on 10 rigs
* Transocean rigs about 10 pct of South America drill fleet
By Jeb Blount
RIO DE JANEIRO, Aug 1 A Brazilian court has
ordered Chevron Corp and Transocean Ltd to
suspend all oil production and transport operations in Brazil
while prosecutors investigate a November oil spill, a decision
that could halt nearly 10 percent of all offshore drilling
operations in South America.
In addition to preventing Chevron from restarting production
at its Frade field that leaked crude off the coast of Brazil,
the injunction could force state oil company Petrobras, BP Plc
, and U.S. independent oil company Vanco to suspend
drilling operations in nine other Brazilian fields that use
The injunction issued on Tuesday is part of controversial
efforts by Brazilian independent prosecutors to get Chevron and
Transocean to pay as much as $20 billion for the spill at Frade
of 3,700 barrels of crude, or according to Chevron, only 2,400
barrels. Both estimates are about 1,000 times smaller than the
2010 BP Deepwater Horizon disaster in the Gulf of Mexico.
"The industry is paying for not standing up to defend
Chevron and Transocean earlier," said Adriano Pires head of the
Brazilian Infrastructure Institute a Rio de Janeiro energy
"Petrobras' CEO has been telling investors she thinks that a
lack of drill ships is the main reason for her company's failure
to increase output," he added. "Now if this ruling stands, she
has a big problem, she is going to have far fewer drill ships."
Transocean leases seven rigs to Petrobras, and one each to
Chevron, BP and Vanco.
Failure to comply with the injunction within 30 days carries
penalties of up to 500 million reais ($245 million) a day,
Brazilian prosecutors and Brazil's Federal Court said.
If upheld, Transocean stands to lose $3.5 million a day in
lease fees from its 10 Brazilian rigs, according to the
company's July 19 Fleet Status Report. That revenue balloons to
$106 million a month and $1.27 billion a year.
Transocean reported total revenue of $8.38 billion in 2011.
There are 112 offshore rigs operating in South America under
contract, according to a July 27 report by IHS, a
U.S.-based research company. Brazil, one of the world's most
active offshore oil frontiers, is home to about three-quarters
of those rigs, according to Rigzone.
The injunction, issued by the Specialized Bench of Brazil's
2nd Region Federal Court, was based on a request by the public
prosecutor's office in the wake of a November oil spill in
Chevron's offshore Frade Field northeast of Rio de Janeiro.
In addition to record Brazilian environmental damages being
sought from Chevron and Transocean in several lawsuits over the
Frade spill. Prosecutors are also pursuing criminal charges
against the companies and 17 of their employees and executives,
with jail terms of up to 31 years.
The decision came on appeal. Judges of the same federal
court rejected the injunction request in April.
Chevron, the No. 2 U.S. oil company, said in a emailed
statement that it plans to appeal the ruling.
Transocean, the world's largest offshore oil-rig operator,
said it has a strong case and will use "every legal means
necessary to prove it." The company added it is evaluating the
ruling and continues to operate in Brazil.
Petrobras' officials were not immediately available for
Chevron could have avoided the accident, Brazil's petroleum
regulator ANP said in a July report on the accident.
The ANP said Chevron could resume oil drilling and
production work at Frade if it can address safety concerns and
improve its procedures. It did not hold Transocean responsible
for the problem.
Chevron was hoping to restart the field soon. It had shut it
in March after other, smaller leaks were discovered. In late
2011, the field produced as much as 72,000 barrels per day.
Chevron is confident that it acted diligently at all times
and in accordance with the best practices in the oil industry,
the San Ramon, California-based company said in a statement.
The leak was controlled in four days, no harm came to human
or marine life and no oil ever reached Brazil's coast, the
Chevron statement said. It also said its drilling plan was
approved by the ANP.
Frade is operated and 52 percent owned by Chevron. Petrobras
owns 30 percent of Frade, and 18 percent is owned by Japanese
companies Sojitz and Inpex.
Transocean shares rose over 2 percent to $47.80 in New York.
Chevron shares rose 1.4 percent to $111.10.