Chevron Will Settle $17.5 Billion Oil Spill Claim for Pennies

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Following a November 2011 leak of about 3,600 barrels of oil from a rig offshore of Brazil, Chevron Corp. (NYSE: CVX) and driller Transocean Ltd. (NYSE: RIG) were slapped with a penalty of $17.5 billion by the government’s public prosecutor’s office. That payment reportedly has been reduced to less than $42 million as the company and the government have agreed on a settlement.

According to a report from the Financial Times, Chevron has agreed to incorporate a number of new procedures to prevent this kind of accident from happening again. In a statement from the public prosecutor’s office a spokesman said:

With the signature of the [accord], which will commit Chevron to take unprecedented action to prevent new incidents and compensate for the spills that occurred in the Frade field — the two suits may be resolved.

The oil from the relatively small spill never reached the Brazilian coast, but that did not soothe official reaction to the accident. The massive original penalty was only slightly less than the $20 billion fund the U.S. government forced BP PLC (NYSE: BP) to establish after the Macondo well explosion killed 11 workers and dumped 5 million barrels of oil into the Gulf of Mexico.

In addition to the fine, Chevron and its partners will cover the cost of implementing the new preventive measures on their own operations.

Chevron continues to battle an Ecuadoran award of around $18 billion for environmental damage in that country caused by Texaco before its 2001 merger with Chevron.

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