Brazil Court Blocks Bid to Suspend Chevron’s Operations in Country
A federal judge with a court in Rio de Janeiro blocked an injunction asking for the suspension of Chevron’s oil operations in Brazil. [1] The request for the injunction on the company’s operations in the country was a part of a civil lawsuit brought against Chevron (NYSE:CVX) for the offshore oil spill in the Frade fields in November last year.
The incident had resulted in around 3,000 barrels of oil leaking into the ocean and prompted a severe backlash from government authorities, who accused the company of not responding adequately to the situation – a charge denied by the company. The blocked injunction had also requested the blocking of deepwater driller Transocean‘s (NYSE:RIG) operations in the country as well. We have a $109 price estimate for Chevron, which is in line with the stock’s current trading level.
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Favorable ruling
The Brazilian prosecution brought up a $11.3 billion lawsuit against Chevron and rig operator Transocean and asked that the company’s be blocked from running operations for their role in the Frade oilfield spill. Some industry observers termed the government’s response to the spill as excessive because of the minimal impact of the incident. While the present ruling does not block the complete lawsuit, it does come as a major relief for Chevron, which has major plans to expand exploration in Brazil’s significant deepwater resources. Chevron has already paid around $50 million in fines related to the spill.
Judge Raffaele Felice Pirro ruled that the prosecution could not prove that banning the two companies from running operations in the country would help in getting them to pay for the alleged environmental damages resulting from the spill. [1] He also said that the requested injunction attempted to punish companies before giving them the chance of a fair trial. Chevron owns a 52% operating stake in the Frade fields.
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- Brazil judge blocks Chevron, Transocean injunction, Bloomberg [↩] [↩]