Brazil Expects Chevron to Bid for New Blocks After Spill

Brazil’s oil regulator anticipates Chevron Corp., which suspended operations in the country last year after an off-shore spill, will submit a bid in an auction for new oil blocks this year.

“We are counting on them” to bid in the so-called pre-salt auction, Magda Chambriard, the head of the regulator known as ANP, said yesterday in an interview in Houston, where she is taking part in a road-show to promote Brazil’s three 2013 oil and gas auctions. San Ramon, California-based Chevron can also “proceed” to produce at its Frade field once it completes certain regulatory requests, she said.

Chevron, the second-biggest publicly traded U.S. oil producer, voluntarily shut all operations in Brazil in March 2012 amid court and regulatory investigations after the ANP ordered the company to suspend output at the Frade field following a 3,000 barrel spill in November 2011. A court on Nov. 27 lifted the ban on Chevron operating Frade, which was Brazil’s eighth-biggest producing field at the time of the spill.

“We value our relationship with Brazil and look forward to being a partner with the country in developing its potential as an energy superpower,” Kurt Glaubitz, a spokesman for Chevron, said in an e-mailed response to questions. “Chevron Brasil is still in talks with Brazilian authorities and moving forward a resolution of outstanding issues related to the Frade field.”

The Frade spill led to two lawsuits against Chevron and Transocean Ltd. for a total of 40 billion reais ($20.2 billion) for environmental damages. The lawsuits were dropped in January.

Some Chevron executives were summoned to Brazilian congressional hearings and had passports temporarily retained by court order following the spill.

Petrobras Control

Brazil will auction onshore- and off-shore oil blocks in May, gas blocks in October and in November will auction the pre-salt blocks, which get their name because the crude is trapped under a layer of salt below the Atlantic seabed. The pre-salt blocks can only be operated by state-controlled Petroleo Brasileiro SA, known as Petrobras.

The government, seeking to boost the use of natural gas for electricity generation, sees OGX Petroleo e Gas Participacoes SA as a model gas producer for power generation, Chambriard said. OGX, whose stock has posted the biggest loss in the world this year among oil producers valued at at least a billion dollars, is producing gas for electricity startup MPX Energia SA. Both MPX and OGX are controlled by billionaire Eike Batista.

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