Brazil is temporarily banning the American company, Chevron, from drilling for oil in its territory.
The National Petroleum Agency (ANP) said it would suspend Chevron’s activities in Brazil until it had established the cause of an oil spill off the coast of Rio de Janeiro.
Chevron has apologised for the leak, but has stressed it acted as rapidly and safely as possible to contain it.
The Brazilian government has fined Chevron $28m (£18m) for the spill.
Brazilian Environment Minister Izabella Teixeira said Chevron could face further fines if an investigation into the spill revealed more infractions.
ANP also rejected a Chevron request to drill a deeper well in the Frade field in order to reach sub-salt fields, which could hold reserves of more than 100bn barrels of high-quality recoverable oil.
It said such drilling would “pose risks to the environment similar to those that occurred in the well where the spill occurred, but bigger and magnified by the greater depth”.
The head of Chevron’s Brazil operation, George Buck, appeared before the lower house of the Brazilian parliament to apologise for the leak.
He said the company respected Brazil and the Brazilian people, its environment, laws and institutions.
“We are going to thoroughly investigate the accident and present the results to the Brazilian people… so that this does not happen again either here or in any other part of the world,” Mr Buck said.
Brazilian authorities said the spill was now under control and the oil slick had been reduced to two square kilometres.
ANP said the leak released between 200 and 330 barrels a day at the height of the spill.
The head of the ANP, Haroldo Lima, said the accident was “serious, but not major”.
He said there was “no comparison” between this spill and last year’s disaster at BP’s Macondo well in the Gulf of Mexico, where 11 people died and about 3,000 barrels a day were leaked.
In recent years Brazil has discovered billions of barrels of oil in deep water that could make it one of the world’s top five producers.
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