RIO DE JANEIRO —Brazil's environmental regulator has rejected the license for an offshore oil drilling project near the Amazon River's mouth, much to the delight of environmentalists who had warned about its potential impact. The decision to deny Petrobras' request to drill the FZA-M-59 block was based on technical inconsistencies and emphasized environmental concerns, according to Rodrigo Agostinho, the agency's president.
As Brazil's current oil production is expected to reach its peak in the coming years, Petrobras has been seeking to secure additional reserves along the country's northern coast. Nearly half of the company's five-year, $6 billion exploration budget was allocated for this area. Despite Petrobras' CEO Jean Paul Prates stating that the first well would be temporary and highlighting the company's lack of offshore drilling leaks, the environmental agency remained unconvinced.
Petrobras was given ample opportunities to address critical issues in its project, but it still exhibits concerning inconsistencies for safe operations in a new exploration area that is environmentally and socially vulnerable, according to Agostinho's decision. The region where the drilling project was proposed is home to unique and biodiverse ecosystems, including little-studied mangroves and a coral reef. Activists and experts had expressed concerns about potential leaks that could harm this delicate environment.
Eighty civil society and environmental organizations, including WWF Brasil and Greenpeace, had called for the license to be denied until a comprehensive study could be conducted. Agostinho's decision was praised by the Climate Observatory, a network of environmental non-profits, which stated that it protected an ecosystem that is largely unknown while aligning with the commitment of the government to combat the climate crisis.
During Luiz Inácio Lula da Silva's initial presidential terms from 2003 to 2010, significant offshore oil discoveries were seen as a means of financing social programs related to health, education, and welfare. Some members of Lula's Workers' Party still view oil as a tool for driving social progress.
The Energy Minister, Alexandre Silveira, stated in March that the area under consideration for offshore drilling is crucial for future development in Brazil's northern region. Lula himself had previously used similar language to describe the pre-salt offshore oil discoveries, referring to them as the "passport to the future."
However, Lula has made efforts to demonstrate his environmental awareness in recent years, particularly in relation to protecting the Amazon rainforest. This commitment was a central theme in his campaign last year to challenge Jair Bolsonaro and seek a return to the presidency.
Activists and experts had cautioned that approving the offshore oil project not only posed a threat to the environment but also undermined Lula's image as an environmental champion.
The process to obtain an environmental license for the FZA-M-59 block began in 2014 at the request of BP Energy do Brasil, and the exploration rights were later transferred to Petrobras in 2020.
Suely Araújo, a former head of the environment agency and currently a public policy specialist with the Climate Observatory, commended Agostinho's decision, stating that it not only pertained to the specific project but also had broader implications for the country. Araújo emphasized the need for a wider discussion on the role of oil in Brazil's future, urging the establishment of a timeline for phasing out fossil fuels and facilitating a just transition for oil-exporting nations like Brazil. She warned against banking on oil wealth, as it could lead to stranded assets, ecological disasters, or both.
Other contentious mega-projects in the Amazon region that are still under consideration include the repaving of a highway that would cut through preserved rainforests, the construction of a major railway for grain transportation, and the renewal of a large hydroelectric dam's license.