More On Chevron and Brazil

Brazil doubled the amount it is seeking in fines from Chevron since I last posted on this. They are now looking at $22B.

Refinery margin is the name given to the incremental profit a firm makes between getting the oil out of the ground and selling it to a refinery. It runs about $10/barrel.

So, Brazil is looking for the entire profits on just over 2 billion barrels of oil. Brazil currently produces 2 million barrels a day, so what they are looking for is all the profit from 1,000 day of production. Those numbers are for the country as a whole: to the extent that Chevron in only one player in Brazil, the fine on Chevron will be considerably more than the thousand-day equivalent.

Another way of looking at this is that the projected fine is 4 years of net profit from all of Chevron’s operations.

So … Chevron is clearly guilty of a spill … but what is macroeconomically relevant here is whether or not the scale of this fine amounts to expropriation — just of future profits rather than current assets (as in Argentina or Sakhalin).