Transocean ordered to halt Brazil work

by on September 27, 2012 6:37 pm GMT

The Zug, Switzerland-based company said at noon Thursday in Rio de Janeiro it was finally served with a preliminary injunction announced in late July in connection with civil and criminal charges related to a spill at Chevron’s Frade field last November.

The company had not acted on the order, which imposes fines of $500 million reais per day for noncompliance, because it had not been officially notified.

Now, unless a court intervenes in that time, the company will be forced to suspend 10 rigs drilling wells, including seven contracted to Petrobras.

“The company is vigorously pursuing the overturn or suspension of the
preliminary injunction, including through an appeal to the Superior Court of
Justice,” a company statement said.

“Absent relief from the courts,
Transocean will be required to comply with the preliminary injunction.”

The company was not cited with wrongdoing in the spill by the National Petroleum Agency, the country’s oil regulator.

The agency has appealed to a high court in Brasilia on behalf of the two companies. An earlier appeal was already refused.

Industry sources close to the issue say the company would need to begin demobilisation in as soon as two weeks to achieve a full stop by the deadline and is taking the fine threat very seriously.

A shutdown for “any period of time” would be a significant hit to the
company’s bottom line, chief executive Steven Newman said this month on
a conference call last week with investors.

A total of 11% of the company’s global revenue comes from the Brazilian market.

It would also be a major setback for the state-controlled Petrobras, which is using Transocean rigs on some of its top exploration projects, chief executive Maria das Gracas Foster told Reuters last week after giving remarks at the Rio Oil & Gas conference.

“We don’t even want to think about what would happen if the ban took effect,” Foster said according to the news wire. “The impact would be very bad.”

Petrobras is directly contracted with Transocean for the Cajun Express, Deepwater Navigator, Falcon 100, Petrobras 10000, Sedco 710 and the Transocean Driller.

Petrobras has also sublet the Deepwater Discovery from BP.

PanAtlantic Energy, better known as Vanco, has contracted with the GSF Arctic 1, while Sedco 706 is under contract to Chevron.

Sedco 707 is not drilling, but present in a US shipyard in-country.