Petrobras lawyers working to overturn Brazil ban on Transocean

RIO DE JANEIRO (Reuters) - Lawyers for Brazil's state-led oil company Petrobras are working to help drilling contractor Transocean Ltd overturn an injunction barring it from work in Brazil, Petrobras' chief executive said Friday.

If Transocean were kicked out of the country, Petrobras would have to stop exploration and development in some of its most promising deepwater oil fields, CEO Maria das Gracas Foster told reporters in Rio de Janeiro.

The ban stems from a November oil spill in an offshore field operated by Chevron Corp . Transocean has 10 rigs working in Brazil, about 13 percent of Brazil's total. Seven of those are working for Petrobras.

While Foster would not outline the company's legal strategy, she said lawyers were looking at ways to help overturn the ban and executives have prepared plans to deal with the disruption caused by the a loss of the rigs, in case lawyers fail.

"We don't even want to think about what would happen if the ban took effect," Foster said after delivering closing remarks at the Rio Oil & Gas conference. "The impact would be very bad."

Foster took charge of Petrobras in February with a goal of cutting rising costs and ending a decade of missed production targets. She has said that a lack of drilling rigs, especially the "ultra-deepwater" rigs owned by Transocean, is one of the key factors slowing development of giant new offshore resources.

Rigs like those owned by Transocean and leased to Petrobras, can cost $750 million or more to build. They can drill as much as 10,000 meters (32,808 feet) below the seabed while floating on the surface of water three kilometers (1.9 miles) deep. Lease fees for the rigs can run as high as $700,000 a day.

"We support Transocean and we don't want to lose the services of this excellent company," she said.

Petrobras has 31 offshore drill rigs, either self-owned or under contract and has contracted 28 more rigs to be built in Brazilian shipyards by 2020.

The Transocean ban stems from civil lawsuits seeking about $20 billion in damages from Transocean and Chevron for a November oil spill in the Frade field.

The spill leaked 3,600 barrels of oil into the sea northeast of Rio de Janeiro, less than 1/1000th of the 2010 BP Deepwater Horizon disaster in the Gulf of Mexico. The oil from the Frade spill never reached shore and caused no discernable environmental damage, Brazil's oil regulator the ANP said.

The ANP said there was no negligence in the spill and that only Chevron had to pay fines and present a remedial plan before getting approval to drill again.

However, prosecutors won an injunction banning the companies operating in Brazil until the civil suit is resolved, which could take years. Chevron and Transocean say they have done nothing wrong.

When the injunction takes effect is under dispute. The July 31 ruling by a Federal Court in Rio de Janeiro was supposed to go into effect 30 days after the judges' decision was published in a local legal gazette and the ruling physically served to company executives.

On Wednesday, people with knowledge of Chevron and Transoceans' legal affairs told Reuters that the injunction on Transocean has not yet been served.

(Editing by Carol Bishopric)

Source: http://news.yahoo.com/petrobras-lawyers-working-overturn-brazil-ban-transocean-233601927--finance.html

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