November 15, 2011 / 6:21 PM / 6 years ago

Progress seen in fixing Brazil oil spill: Chevron

Motorists are shown at gas pumps at a Chevron gasoline station in Burbank, California July 31, 2009.Fred Prouser

(Reuters) - Chevron Corp. said on Tuesday that oil flow from an appraisal well drilled at its Frade field in Brazil appears to have ceased, the first sign of progress in efforts to contain an oil spill in the region.

Monitoring by the company also showed "a significant decrease" in the amount of oil observed leaking from a line of seeps on the ocean floor, the company said in a statement.

Cementing of the well, which is suspected to have been a cause for the oil leak, will be finished in coming days.

Oil seeps have created a "sheen" with a volume of 400 barrels to 650 barrels of oil on the ocean in the area, which lies 370 kilometers (230 miles) northeast of Rio de Janeiro.

The statement is the first signal by the company that actions taken to control the spill are yielding results. Government officials began a probe and said that drilling likely increased pressure on the area where the well is located, leading to the leak.

The incident is likely to increase scrutiny of safety in Brazil's offshore operations as the Latin American country seeks to tap huge, newly found reserves and become a major oil exporter.

Analysts said it is too early to know whether the spill will slow Brazil's plans to develop ultra-deepwater fields in the prolific region known as the subsalt, which is believed to hold more than 50 billion barrels of oil.

The Frade field is located in the Campos Basin, which produces the vast majority of Brazil's oil, in water depths of 1,200 meters (3,800 feet). The company has said Frade is not part of the subsalt.

Last year's BP spill in the Gulf of Mexico spurred greater vigilance by regulatory authorities over Brazil's offshore operations, state oil company Petrobras has said.

New investments in the subsalt are on hold due to a political dispute over how to distribute royalties among states.

Reporting by Guillermo Parra-Bernal; editing by Bob Burgdorfer

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