Chevron could face risk of losing Frade field concession - ANP

Friday, November 25, 2011

Chevron's (NYSE: CVN) subsidiary Chevron Brasil could lose its Frade field concession license if it fails to identify the causes and responsible parties for the oil leak, a spokesperson at Brazilian hydrocarbons regulator ANP told BNamericas.

The watchdog has suspended permission for Chevron to drill any further well in Brazil until investigation of the leak is concluded. The company is however able to carry on with production operations in the field.

The offshore Frade field produces 79,000boe/d, according to a Chevron statement.

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Frade is Chevron's first operating oil field in Brazil and is in roughly 3,700ft (1,128m) of water, 370km northeast of Rio de Janeiro. The field contains an estimated 200M-300Mb of recoverable oil and produced its first crude in the second quarter of 2009.

Chevron operates Frade with a 51.75% stake, while Brazilian state-run energy major Petrobras (NYSE: PBR) holds 30% and Frade Japão the balance.

Brazil's environmental protection agency fined Chevron 50mn reais (US$27mn) for the incident.

The company might see other fines from ANP, the Rio de Janeiro state environment secretary and other government bodies. Chevron is already facing a police probe regarding the leak.

"ANP has identified a leak of 330b/d for more than one week in the offshore Frade field, way more than Chevron's information, which said the total leaked was 65b," a spokesperson for ANP told BNamericas earlier in the week.