December 14, 2017 / 9:37 PM / a year ago

Exclusive: Chevron nears Schlumberger deal to drill wells in Brazil: sources

RIO DE JANEIRO (Reuters) - Chevron Corp has reached preliminary agreement with oil services firm Schlumberger NV to drill six wells in a Brazilian offshore field, two sources said this week, in a bid to lift its output in the South American country after a 2011 oil spill there cut production.

The logo of Chevron Corp is seen in its booth at Gastech, the world's biggest expo for the gas industry, in Chiba, Japan April 4, 2017. REUTERS/Toru Hanai

Six wells would be drilled in the Frade field in Brazil’s offshore Campos basin, and work should begin in early 2019, the sources said. Drilling for the contract, worth about $20 million would be spread over 18 to 24 months, one of the people familiar with the matter said.

One of the sources spoke on Thursday and the other on Wednesday. Both declined to be named since the agreement was not public or final.

The proposed price tag does not include well completion or drilling fluids needed for the project, the sources said. The agreement, which awaits approval by Chevron’s board, covers drilling, drill bits, cementing and well data collection, they said.

Chevron spokeswoman Isabel Ordonez declined to comment. Schlumberger spokesman Joao Felix also declined to comment.

If approved, the project would mark a much-anticipated expansion of exploration for Chevron in Latin America’s top oil producing nation, where its output has slumped to 12,500 barrels per day (bpd) from 36,400 bpd before the 2011 accident.

The spill, which released 2,400 barrels into the ocean some 107 kilometers (73 miles) off the coast of Rio de Janeiro state, did not reach the shore and was smaller than several previous spills in Brazil by state-controlled oil firm Petroleo Brasileiro SA.

But coming on the heels of BP Plc’s 4.9 million-barrel U.S. Gulf of Mexico spill, the accident drew widespread attention and led prosecutors to bring criminal charges against the company and 11 employees, as well as to seek $10.7 billion in damages through a civil lawsuit.

According to a 2013 filing, Chevron settled the civil charges by promising to spend $43 million on social and environmental programs. The criminal charges were dismissed in 2015, but prosecutors have sought to reinstate the case by appealing the decision, Chevron has said.

Chevron did not take part in October auctions of blocks in Brazil’s choice offshore pre-salt layer, even as rivals Royal Dutch Shell, BP and Exxon Mobil Corp bet big.

Petrobras owns 30 percent of Frade. Chevron owns 52 percent and is responsible for field management. The rest is owned by Frade Japao, a unit of Japan’s Inpex.

Additional Reporting by Ernest Schneyder and Marta Nogueira in Rio de Janeiro; Editing by Gary McWilliams and Matthew Lewis

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