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Brazilian Government Suspends Chevron’s Drilling Rights (CVX)

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ChevronThe Brazilian government, today, suspended oil and gas major Chevron Corporation’s (NYSE: CVX) drilling rights in the country. The San Ramon, California-based company’s drilling rights have been suspended until it clarifies the cause of an offshore oil spill. The suspension threatens Chevron’s participation in Brazil’s oil bonanza.

The decision to suspend the drilling rights after the CEO of Chevron’s Brazilian unit, George Buck testified before the Brazilian Congress. Buck apologized for the November 8 spill. Approximately 2,400 barrels of oil were leaked into the ocean off the coast of Rio de Janeiro due to the spill.


Buck said that the company acted as rapidly and safely as possible and used all resources to contain and stop the flow of oil from the well. Buck also said that the company controlled the source in four days and worked with transparency and cooperation with the authorities in Brazil.

Brazil’s National Petroleum Agency suspended Chevron’s drilling rights, saying that there was evidence that the company had been negligent in its study of data needed to drill. The agency also said that the company was negligent in contingency planning for abandoning the well in the event of an accident.

The agency also rebuffed a request from the company to drill deeper wells into subsalt areas in the Frade field, where the spill took place. The Frade field is located in Brazil’s Campos Basin, which is an oil-rich area. The Frade field is the only block in Brazil where the company is producing oil. The company has a 52% stake in the Frade field, with the remaining 48% being owned by Brazil’s Petrobras and Frade Japao.

Chevron has also been fined $28 million by an environmental agency for the spill. However, the company could end up paying even more if the National Petroleum Agency and Rio’s state government decide to impose fines.

 


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edliston
Post Written By: Ed Liston

Ed Liston is a senior contributing editor at TheStockMarketWatch.com. An active market watcher and investor, Ed guides an independent team of experienced analysts and writes for multiple stock trader publications. He is widely quoted in various financial publications on the Internet. When Ed is not writing about stocks, investing in stocks, talking about stocks, or otherwise doing something stock related, he likes to go sailing and fishing in his yacht.


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Ed Liston

Ed Liston is a senior contributing editor at TheStockMarketWatch.com. An active market watcher and investor, Ed guides an independent team of experienced analysts and writes for multiple stock trader publications. He is widely quoted in various financial publications on the Internet. When Ed is not writing about stocks, investing in stocks, talking about stocks, or otherwise doing something stock related, he likes to go sailing and fishing.

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