It used to be that resource companies could count on relatively low penalties for spills in developing countries but the Government of Brazil is showing big teeth in fining Chevron the maximum legally allowed amount. The oil company experienced a crude oil spill at one of its offshore wells earlier this month.

The relatively small spill, estimated to be about 2400 barrels in total compared to BP’s Gulf of Mexico spill which may have been almost five million barrels in total, took place in deep water about 120km off the Atlantic coast of Brazil.

Chevron has accepted full responsibility for the spill and has promised to do everything possible to clean it up. The Government of Brazil has fined Chevron 50 million reais ($USD28 million) and has suspended the Company’s permits for all current and planned exploration activities. More fines and penalties are possible. At the current level, the fine amounts to more than $11,500 per barrel of oil spilled.  Clean up costs will add significantly to this figure.

A Brazilian Government perspective from the Instituto Brasileiro do Meio Ambiente e dos Recursos Naturais Renováveis (IBAMA) can be found in Portuguese at http://www.brasil.gov.br/noticias/arquivos/2011/11/21/ibama-multa-empresa-chevron-em-r-50-mi-por-vazamento-de-oleo-no-rio-de-janeiro

A press release from Chevron is to be found at http://www.chevron.com/chevron/pressreleases/article/11232011_chevronvoluntarilysuspendscurrentandfuture.news