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Brazil suspends Chevron's oil exploration in wake of spill off Rio coast

From Shasta Darlington, CNN
updated 6:44 AM EST, Thu November 24, 2011
  • NEW: Chevron says it will "adhere to all the rules and regulations" of Brazil
  • An oil leak that began on November 7 put some 2,400 barrels of oil into the ocean
  • Chevron says the leak was largely under control as of Monday
  • Brazil has also slapped Chevron with a $28 million fine

(CNN) -- Brazil on Wednesday suspended Chevron's oil exploration rights in the country until it can explain the cause of a recent oil spill in deep water off the coast of Rio de Janeiro, and its response to the accident.

The decision by Brazil's National Agency of Petroleum, Natural Gas and Bio-Fuels comes two days after Chevron was fined $28 million for the oil spill.

In a news release, the agency also said it had rejected Chevron's request to drill another well in the offshore Frade field into what is known as the subsalt region, saying that it could involve the same risks that were encountered in the well that sprung a leak on November 7.

Chevron said in a statement Wednesday evening, "we do not have confirmation that we have been notified. Chevron will adhere to all the rules and regulations of the Government of Brazil and its agencies."

According to Chevron, a relatively small 2,400 barrels of oil leaked into the ocean, but did not threaten Rio de Janeiro's famed beaches. It said the leak was largely under control as of Monday and the oil slick had been considerably reduced through cleanup and dispersal.

While the leak pales in comparison to the massive BP disaster last year when 4 million barrels of oil poured into the Gulf of Mexico, it raises questions about the safety of drilling in the extreme depths that Brazil plans to exploit in coming years.

The president of Chevron's Brazil operations appeared before a congressional commission on Wednesday in Brasilia to discuss the incident. During his remarks, George Buck apologized to the Brazilian people and the government, according to state-run news agency Agencia Brasil.

He also defended the company's record, saying it had acted responsibly and responded with the greatest speed and efficiency possible, the news agency said.

Brazilian authorities have criticized the multinational company's response time and said that it did not provide accurate information about the leak and cleanup efforts.

Buck said that he hoped Chevron would continue working as "partners" with Brazil, according to Agencia Brasil.

Brazil hopes to become the third largest oil producer by 2020 as a result of its development of the subsalt region.

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