Brazil has given the greenlight to 19 new oil exploration areas in the Amazon basin. This move has sparked strong criticism from environmentalists and indigenous communities who are concerned about potential environmental damage, although the government claims that the move would secure the country’s transition to clean energy. In the meantime, actual oil exploration activities appear to be far away as the bid winners still do not have operating licenses.
Earlier this year, Brazil auctioned 172 oil exploration areas, including 47 in the oil-rich Equatorial Margin, which encompasses the country’s coastal maritime zones.
Of the total offer, 34 blocks were acquired, including 19 in the Foz do Amazonas region along the Amazon River. The total investment was approximately US$185million, of which US$157 million was for blocks located in the Amazon basin.
The 19 blocks in Foz do Amazonas collectively span over 16,000 km², an area equivalent to half the size of Belgium. The winning bidders for these blocks include major players such as the Brazilian state-run oil giant Petrobras, the multinational oil and gas corporation ExxonMobil, the American multinational energy corporation Chevron, and the China National Petroleum Corporation.
Amazon’s oil potential
The Federal Government estimates that it may be possible to extract 10 billion barrels of oil from the Equatorial Margin. The region is considered the country’s main opportunity to replenish its oil reserves following the oil discoveries in 2006.
Expectations surrounding the Foz do Amazonas exploration have surged, particularly after Brazil’s neighbors, Guyana and Suriname, have extracted significant quantities of oil since 2015, generating billions of dollars annually.
President’s strong support for oil exploration
The potential exploration by Petrobras is being enthusiastically supported by President Luiz Inácio Lula da Silva, with the government also having reached consensus as well.
The main argument of the Brazilian government is that the revenue generated could finance the transition from oil to renewable energy sources. President Lula, who has won a reputation for his strong environment-protection stance, reasoned:
“Why can’t we exploit this wealth to enable another wealth to happen, which is the energy transition?”
Furthermore, oil exploration is viewed as a means to boost the economy of Amapa, one of Brazil’s poorest states. According to calculations by the Jones dos Santos Neves Institute, 33% of Amapá’s population live in extreme poverty, which is higher than the national average of 27.5%. Commenting on the situation, President Lula noted that Amapa “should not be condemned to poverty if there is oil”.
Political-economic games?
Meanwhile, experts have pointed out a glaring contradiction between climate targets and the interests of the oil companies. A recent report by WWF-Brazil, the International Institute for Sustainable Development, and the World Benchmarking Alliance indicated that if the Paris Agreement’s goal of limiting warming to 1.5°C above pre-industrial levels is met, up to 56% of Brazil’s new oil production and up to 85% of Petrobras’s projects could become economically unviable, resulting in US$35 billion being wasted. This would be almost five times Petrobras’s net profit in 2024 of US$7.5 billion.
A world that can limit warming to 1.5°C would require very strong climate policies, such as major reductions in fossil fuel use and a rapid transition to renewables.
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If this target is reached, experts note that oil demand and prices would fall significantly, making costly new extraction projects unviable. It also means that oil companies will only remain profitable if the world fails to meet the climate goals.
Hence, one cannot but wonder if the decision of the Brazilian government, which was previously strongly committed to climate goals, is not playing into the hands of oil giants.
Environmentalists outraged
For Suely Araújo, Public Policy Coordinator at the Climate Observatory, the justifications provided by President Lula’s government in defense of oil exploration in the Amazon river mouth basin are “absurd”. She stated:
“It’s like saying, ‘I’m going to create a war to achieve peace.’ It doesn’t make sense: in reality, it’s worsening the problem. It is a biologically sensitive area, and complex in terms of drilling and oil production operations. We have unique ecological characteristics in the region, with very strong currents, which makes it prone to accidents. In a potential spill, in less than a day, most of the oil would already be in international waters, and it is still unknown how much of that oil would return to our coast.”
For its part, the global environmental organization Greenpeace has highlighted that instead of protecting fragile ecosystems, Brazil is expanding its oil exploration frontiers in a region of extremely high socio-environmental sensitivity. This, it noted, ignores the context of the Bonn Climate Conference negotiations, where delegations are working to consolidate progress towards a just energy transition.
The independent conservation organization WWF-Brazil has warned of the overlap of blocks covering protected areas and indigenous territories, which could trigger legal and social conflicts.
Indigenous voices rise against oil exploration
Brazil’s numerous indigenous communities have slammed the authorities for their support of fossil fuel exploration.
“We will resist discussing the matter and we will not give up. It is our territory,” affirmed Alana Manchineri, international advisor for the Coordination of Indigenous Organizations of the Brazilian Amazon.
The groups, which have almost no legal recourse except lobbying for their rights, have also rejected the government’s argument that this is a matter of national sovereignty.
“It’s not just Brazil speaking. The Amazon Basin Bloc is made up of nine countries. It’s important to highlight that we are a single people; we are not isolated by the border.”
Licensing as an impediment?
Meanwhile, none of the oil giants that won the bid have licenses, and as any field operations are contingent upon specific environmental licensing, this makes it impossible for them to begin operations.
For example, Brazil’s state-run Petrobras is still awaiting environmental clearance from the Brazilian Institute of Environment and Renewable Natural Resources (IBAMA) to drill in block FZA-M-59 off the Amapá coast, a block it acquired back in 2013. The licensing process for the block began in 2014 and remains ongoing. Recently, IBAMA approved the concept for Petrobras’s Oiled Fauna Protection and Care Plan, but further inspections and spill response simulations are still required before drilling can commence.
