Chevron’s Brazil Fines Look Like A Light Slap On The Wrist

by Trefis Team
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Chevron (NYSE:CVX) could be fined up to $25 million by Brazil’s regulator ANP for infractions related to its spill. [1] The November 2011 spill at the Frade fields resulted in the leakage of 2,400 to 3,000 barrels of crude oil into the sea and has prompted civil as well as criminal cases against Chevron. Later in March this Year, Chevron took steps to stop production at Frade, which has resulted in a drop of 30,000 barrels/day in its global productions. The company maintains that its response to the leak was in accordance with the law as well as standard industry practices.

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Regulator investigation

According to reports, Brazil’s regulator could impose a fine of up to $24.5 million for the 25 breaches it uncovered as a part of its investigation. [1] ANP will also come up with its report on the incident later this week that will shed more light on the incident. The leak and some following complications prompted Chevron to shut down production in the field earlier this year.

Chevron has also been subject to court cases filed by federal prosecutors, suing the company for about $22 billion for the environmental damage resulting from the spill and an oil sheen found in the region in March this year. [2] Some of the company’s employees have also been subject to criminal charges because of their role in the incident. This is in addition to initial fines.

Analysts have deemed the response from the Brazilian authorities as excessive, warning that the measures could defer investments in the country’s pre-salt finds, which could hold between 50-100 billion barrels of oil. A $25 million penalty would be a relatively minor penalty for Chevron, but its impact of the agency findings on the court cases related to the incident could be significant.

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Notes:
  1. Brazil Says Chevron Fine Unlikely to Surpass $25 Million, WSJ [] []
  2. How Brazil Is Making an Example of Chevron, Business Week []
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