The Brazilian government yesterday fined Chevron Corp. $28 million and threatened to demand a greater sum for the oil company's spill off the nation's coast.

Over the weekend, Chevron admitted full responsibility for the 2,400-barrel leak that sprung from its underwater well earlier this month (Greenwire, Nov. 21).

The spill has since slowed to a "residual" flow and is not a "major" disaster, said Harold Lima, head of Brazil's National Petroleum Agency.

Still, the Chevron spill is Brazil's biggest since 2000, and the incident has damaged the company's reputation in the South American country. Chevron, which has invested heavily in its Brazilian oil prospects, acknowledged it underestimated the pressure in the oil reservoir in which it was drilling.

Chevron initially attributed the spill to natural seepage but said its later acceptance of blame for the incident enabled the company to avoid pitfalls BP PLC faced when addressing its spill in the Gulf of Mexico.

"It doesn't appear as if there was any omission here like there was in the Gulf of Mexico," said Cleveland Jones, a geologist with the National Oil and Gas Institute at the State University of Rio de Janeiro.

Although the slick is relatively small and contained, the spill has heightened political sensitivity to the already controversial issue of drilling in Brazil's deep offshore oil reserves.

The nation's subsalt oil deposits are approximately the size of New York state and could launch Brazil to the position of third-largest oil producer in the world after Russia and Saudi Arabia (Coimbra/Lorenzi, Reuters, Nov. 21). -- PK