Brazil Supreme Court upholds injunction against Chevron, Transocean

“RIO DE JANEIRO — Brazil’s Supreme Court has upheld a lower-court injunction barring oil major Chevron and drilling rig operator Transocean from operating in the country, denying a request by local regulators to lift the ban.

“Brazil’s National Petroleum Agency, or ANP, appealed the ban because it believes enforcing the injunction and immediately halting the two companies’ operations could cause serious safety problems and great economic harm, according to the ruling.

“The decision returns Chevron and Transocean’s broader appeal of the ban to a regional court in Rio de Janeiro, where the case is ongoing. A Brazilian court banned the two companies from operating in the country in late July because of their roles in an offshore oil spill last year. …

“The ANP had sanctioned Chevron and said it would fine the company for any wrongdoing relating to the spill, but has cleared Transocean. Despite the incident, ANP officials have said they would meet with Chevron to discuss restarting output at the Frade field, which the company voluntarily shuttered in March.

“Mr. Newman said Wednesday the court hasn’t yet served the company with the injunction and that all of Transocean’s rigs in Brazil are still under contract and generating revenue–the company has 10 rigs in Brazil. …

“But that [temporary suspension of work] scenario still "doesn’t look pretty" for Transocean, which earns about 11% of its revenue in Brazil and would continue to incur costs keeping its rigs ready to work at a moment’s notice, Mr. Newman said. Transocean had $2.575 billion in revenue in the second quarter.”

This punishment of Chevron and Transocean stems from a post-Macondo spill incident involving a spill of some 3,000 barrels of oil from a well operated by Chevron. Transocean is the owner of the rig that was servicing the well at the time.