Petrobras To Appeal Amazon Oil Rejection In Lula Litmus Test

By Tom Kool - May 24, 2023

• Last week, Brazil's Ibama environmental agency rejected the environmental license for exploratory drilling in the deep waters of the Amapa at the mouth of the Amazon.
• The ruling indicates a fracture in the Lula camp that has created two factions, one keen to drive oil drilling forward, and the other more concerned with protecting the environment.
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• Brazil’s state-run oil giant Petrobras is preparing to file a request to appeal the decision.

Brazil’s state-run oil giant Petrobras is preparing to file a request to appeal a decision to reject the environmental license for exploratory drilling in the deep waters of the Amapa at the mouth of the Amazon. Claiming that it has already met the project’s technical needs, Petrobras said it would comply with additional requirements from the country’s Ibama environmental agency to gain approval for the drilling of a exploratory well in bloc FZA-M-059. 

Last week, Ibama ruled to block the drilling in a major blow to the government of President Luiz Inacio Lula da Silva. 

The ruling indicates a fracture in the Lula camp that has created two factions, one keen to drive oil drilling forward, and the other more concerned with protecting the environment. This inter-camp rivalry has led Lula to proceed more cautiously, with Amazon oil now positioned as an important litmus test for the administration. 

In terms of additional measures Petrobras would be willing to take, the oil giant committed to expanding a “fauna stabilization base in the city of Oiapoque in addition to a base already built in Belem, so that in the remote possibility of an oil spilling assistance to the fauna can be carried out in both locations," according to a statement. 

Earlier this week, Ibama head Rodrigo Agostinho told CNN that the environmental regulator was not likely to grant Petrobras’ appeal, citing the agency’s refusal to bow to political pressure. "Petrobras can resubmit the request, but most likely the technical team will not change its opinion without changes to the project," added Agostinho. Agostinho’s statement followed Lula’s comments that it would be “difficult” to imagine drilling in the mouth of the Amazon causing environmental problems to the rainforest. 

By Tom Kool for Oilprice.com