Chevron pays $17.3 million Brazil fine for November spill

RIO DE JANEIRO (Reuters) - Chevron Corp CVX.N, the second-largest U.S. oil company, paid a 35.1 million real ($17.3 million) fine levied by Brazil's petroleum regulator for irregularities related to a November oil spill, the regulator said in a statement on Thursday.

A Chevron sign is displayed at a gas station in Buckeye, Arizona October 27, 2011. REUTERS/Joshua Lott

Chevron received a 30 percent discount on the 35.1 million real charge because it paid promptly and did not challenge the 24 violations found by the regulator, the ANP, in its operations in the Frade Field northeast of Rio de Janeiro, the ANP said.

The discount, allowed under Brazilian law, would reduce Chevron’s bill to about 24.6 million reais.

The decision to pay the fine and not contest the ANP’s findings is a sign the company wants to move quickly to fix problems at Frade and return to production as soon as possible, a person with knowledge of Chevron’s decision-making process in Brazil told Reuters last week.

Chevron stopped all operations at Frade in March after traces of oil were found floating in the exploration area. Both the ANP and Chevron said the oil was not from the Frade field.

Frade, which reached peak production of more than 70,000 barrels of oil just before the spill, is in the middle of Brazil’s Campos basin, the country’s most productive oil region. Natural seeps of oil from undersea rocks are also common in the area.

Chevron, and Transcoean Ltd. RIG.N, its drilling contractor in Frade, also face civil lawsuits seeking nearly $20 billion in damages for the 3,600 barrel spill in November.

Prosecutors have also filed criminal charges against the companies and 17 of their employees and executives that carry jail terms of up to 31 years.

An injunction, served today on Transocean, the world’s largest drill-rig operator, bans the companies from operating in Brazil until the court cases are resolved. They have 30 days to comply or face large fines.

Chevron and Transocean say they are innocent of the charges and that the damages sought are out of proportion with the impact of the spill.

The spill was less than 1/1000 of the 5 million barrel 2010 Deepwater Horizon disaster and spill in BP Plc's BP.L Macondo field in the Gulf of Mexico. Eleven workers died in that accident and oil flowed into the ocean for months.

The Chevron spill caused no discernable environmental damage, not reach shore and did not harm human or animal life, according to the ANP.

The Frade spill was controlled within four days.

The ANP July report on the Frade spill, while pointing to problems with Chevron’s drilling plan and safety preparedness, said the company was not negligent and that Transocean had no responsibility in the accident.

Chevron stock rose 0.8 percent to $117.20 in New York on Thursday.

Reporting by Jeb Blount; Editing by Chris Gallagher