Brazil Moves to Allow Amazon Oil Drilling, Marring Lula’s Summit

Simone Iglesias and Andrew Rosati
·4 min read
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(Bloomberg) -- President Luiz Inacio Lula da Silva’s government is moving toward allowing Brazil’s state-run oil company to survey an ecologically sensitive offshore region, a decision that threatens to overshadow a major environmental summit and feed a festering dispute in his administration.

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The attorney general’s office, or AGU, will issue an opinion that it is not necessary for Petroleo Brasileiro SA to conduct a major environmental impact study in order to begin prospecting oil in the so-called Foz do Amazonas, a region off the country’s northern coast, according to two people with knowledge of the matter.

The attorney general, who represents the interests of the whole government in judicial matters, will issue a technical opinion that takes into account a recent Supreme Court ruling in a similar case, said one of the people. Both requested anonymity because they were not authorized to speak publicly.

Answering a request for comment, AGU said in a statement it is “carrying out a legal analysis on the case” and will publish a formal response in the next few days.

Brazil’s top environmental agency, Ibama, earlier this year blocked the company’s plans to begin exploratory offshore drilling in the potentially oil-rich region in the Equatorial Margin — an area that is home to a 3,600-square-mile (9,500-square-kilometer) coral reef. Ibama didn’t immediately reply to a request for comment.

The stalemate between regulators and Petrobras, as the oil giant is known, has led to months of simmering tensions inside the Lula government. The 77-year-old president has tried to strike a balance between economic development and the ambitious green agenda outlined by Environment Minister Marina Silva, who oversees Ibama.

Pressed to take sides in the dispute between Petrobras and Ibama, Lula has said he favors research to determine whether oil is present in the region and insists that any exploration would be carried out safely to avoid environmental problems.

This week, he said the issue was still “under discussion” inside his government.

Amazon Summit

The stance has marred Lula’s two-day summit of South America’s eight Amazon nations in the rainforest city of Belem. He opened the series of meetings declaring the start of a new relationship with the Amazon where “resources will not be exploited for the benefit of a few, but valued and placed at the service of all.”

But clear divisions in that approach were on display for the world to see.

Colombia’s Gustavo Petro, who has long pushed for a ban on new oil explorations, slammed a “progressive denialism” among countries’ efforts to curb climate change.

“What are we doing? Letting hydrocarbons be exploited in the jungle,” he said. “Isn’t that a complete contradiction?”

Read more: Lula Enlists Neighbors in Brazil’s Battle to Save the Amazon

As presidents debated, hundreds of Indigenous protesters marched near the gathering Tuesday demanding protection for their territories and an end to natural resource extraction in the Amazon. They carried signs that read “We were always here” and “They robbed our land, they robbed our future.”

The disputed deep-water block in the Equatorial Margin has raised particular concern because of its location off the coast where the Amazon River flows into the Atlantic. Marina Silva, who has emerged as Lula’s chief environmental diplomat, has lashed out against green-lighting the project.

“Sometimes people use the wrong term: ‘Make environmental licensing more flexible’,” she said Tuesday. “No one makes heart, kidney or eye surgery flexible.”

The two repaired a fractious relationship that ruptured 15 years ago, when Silva stepped down as environment minister of Lula’s first presidency during a dispute over the construction of a major hydroelectric dam in the Amazon region.

On Tuesday, Brazil’s Mining and Energy Minister Alexandre Silveira pushed back on criticism that pursuing new oil projects would jeopardize Lula’s aspirations to become a climate leader.

“We are working hard to help the planet decarbonize, but we can’t hide our eyes from reality,’ he told reporters on the sidelines of the summit.

The Brazilian government’s committments to a carbon-free future are far from clear. Petrobras said late Tuesday that the company’ top brass met with Bolivian President Luis Arce in Belem to discuss areas of cooperation in the exploration and production of natural gas.

Petrobras sees the Equatorial Margin as Brazil’s last promising exploration opportunity. The area is geologically similar to Guyana, where Exxon Mobil Corp. has recently made multibillion-barrel oil discoveries.

The South American leaders who make up the Amazon Cooperation Treaty Organization inked a 113-point declaration late Tuesday. In it, they recognized the need of avoiding “a point of no return” in the Amazon, but did not make any binding commitments on key issues like natural resource extraction or an end to illegal deforestation, which Lula has pledged to do in Brazil by 2030.

When asked about the future of the Foz de Amazonas on Wednesday, Silva said projects were approved or denied on a technical basis and Ibama would not intervene.

“We don’t make it easy, and we don’t make it difficult,” she said.

--With assistance from Peter Millard, Bruna Lessa and Mariana Durao.

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