Chevron Settles Brazil Spill for $41.6M

Integrated energy behemoth, Chevron Corp. recently entered into an agreement with prosecutors in Brazil for settlement of lawsuits concerning an oil spill, off the country’s coast of Rio de Janeiro.

Per the contract, Chevron is liable to pay $41.6 million as compensation for the spillage of about 3,000 barrels of crude oil in Nov 2011, during the drilling activities at the Frade oil and gas field. The field is based 370 kilometers offshore Rio de Janeiro and at a water depth of approximately 1,128 meters.

Frade field produces 60,000 barrels of oil every day and is believed to have recoverable oil of 200 to 300 million barrels. Chevron is the operator of the field with 51.74% ownership, while Brazilian energy giantPetrobras SA  retains 30% interests in it. The remaining 18.26% is owned by Frade Japá o Petròleo Ltda.

As part of the deal, Chevron will have to take precautionary measures to ensure that no such incident is repeated in the future. The closure of the deal is however, subject to the approval of the federal court.

Chevron was utilizing the rig of  Transocean Ltd. , an offshore drilling giant, when the oil-spill incident occurred. However, as per the contract, Transocean will not have to pay any charges on account of the accident.

Regulatory government authorities concluded that damages owing to the oil spillage were not that grave, contrary to what they had originally thought. As a result, Chevron will have to make a payment of only $41.6 million, which is far below the Brazilian prosecutors’ initially estimated figure of $20 billion. Moreover, the aforesaid payment agreed upon by Chevron takes care of all the damage claims charged by the federal prosecutors of Brazil.

Petrobras signed the agreement for P-75 and P-77

The agreement for the construction of platforms P-75 and P-77 was signed on Monday (Sept. 16), at Palácio Piratini, in Porto Alegre, with the RIG Consortium, which is formed by Queiroz Galvão, Camargo Correa, and IESA. The ceremony was attended by the President of Brazil, Dilma Rousseff, and our CEO, Graça Foster.

The President remarked that ten years ago nobody believed that Brazil could have a naval hub. "Rio Grande do Sul now has a naval hub that shows the ability and strength of a policy that decided it was indeed possible to produce in Brazil," said Rousseff, highlighting the importance of the growth of the Brazilian oil and gas industry supplier chain.

In her address, Graça said that in 2013 we will conclude eight platforms that will help us achieve the goal of doubling production by 2020. "We have 90% contracted in order to be able, in 2020, to double what we produce today, in other words, to reach 4.2 million barrels," she said. She also praised the Brazilian shipbuilding industry: "The learning curve is spectacular. We are very near becoming one of the greatest centers of excellence in the world again."

FPSOs P-75 and P-77

FPSOs (platforms that produce, store and offload oil) P-75 and P-77, with production capacities of 150,000 barrels per day each, will be deployed in Transfer of Rights blocks, in the Santos Basin pre-salt layer, along with two other similar units, the P-74 and P-76. The RIG Consortium will be in charge of building the modules of and integrating both platforms. The work will be done at the Honório Bicalho shipyard, in Rio Grande.

The vessels intended to have their hulls converted to the P-75 and P-77 are at the Cosco Shipyard, in China, undergoing hull preparation services, and are expected to arrive in Rio de Janeiro (RJ) in the second half of 2014, where the conversion works will be performed at the Inhaúma Shipyard. Upon the completion of this step, the hulls will go to Rio Grande. The P-75 is slated to arrive in Rio Grande in the second half of 2015, while the P-77 in the first half of 2016. The works are expected to create approximately 4,400 direct and indirect jobs at the peak of activities. The contractual domestic content is foreseen to be 65% to 71%.

ABB wins contract to construct indoor transmission substation in Brazil

Furnas Centrais Eletricas has awarded a contract to ABB for construction of a new indoor transmission substation to power the Maracana soccer stadium in Rio de Janeiro, which will host the final of the 2014 FIFA World Cup.

Covering design, supply, install and commission a new indoor substation for replacement of the existing installation in Grajau, the $30m contract will also supply power to the neighborhood surrounding the stadium.

In addition, the company will install IEC-61850 substation automation, control and protection systems to facilitate both local and remote control and monitoring.

ABB Power Systems division head Brice Koch said the substations will allow additional power supplies required during the forthcoming global sporting events and will also reinforce the country's transmission grid for the future.

''ABB has the range of technologies, the experience and the project management capabilities to support the country in its efforts to strengthen its power infrastructure,'' Koch added.

The 63 kilo-amperes substation can be constructed on the same plot of land as the existing substation due to GIS's compact footprint.

Brazil's ANP Approves Development Plan for Oliva Oil Field

Brazilian oil companies Barra Energia, QGEP Participacoes SA (QGEP3.BR) and OGX Petroleo e Gas Participacoes SA (OGXP3.BR) received approval to develop the Oliva offshore oil field, Barra Energia said Tuesday.

The Oliva field sits in the same area where billions of barrels of crude oil were found trapped under a thick layer of salt off Brazil's coast, and the three companies eventually hope to drill into the pre-salt layer. Oliva and a sister oil field known as Atlanta are above the salt layer.

Barra Energia, QGEP and OGX earlier this received similar approval to develop the Atlanta field, which is estimated to hold recoverable reserves of about 260 million barrels. Oliva is considered about half the size of Atlanta, although no estimates of recoverable reserves have been released.

Development of Atlanta and Oliva continue QGEP's emergence as a growing player in Brazil's offshore oil industry. The firm currently produces natural gas from the Manati offshore field, while first oil from Atlanta is expected between the second half of 2014 and the first half of 2015. First oil is expected to be produced at Oliva in 2021, Barra Energia said.

The approval could also help troubled OGX regain some credibility. OGX has suffered from lower-than-expected production and operational problems at its Tubarao Azul field. The issues at Tubarao Azul created a crisis of confidence for controlling shareholder Eike Batista's EBX Group of companies as investors grew concerned that many of the start-up firms would be unable to produce concrete returns. OGX is currently restructuring its debts.

Barra Energia holds minority stakes in several promising offshore areas but doesn't yet produce any oil.

QGEP operates the BS-4 block with a 30% stake. Barra Energia owns 30%, while OGX holds the remaining 40% after buying out state-run energy giant Petroleo Brasileiro (PBR, PETR4.BR) for $270 million last November.

QGEP shares were down 0.6% at BRL11.78 in early afternoon trading, while OGX shares were up 2.5% at BRL0.41. Barra Energia is closely held.