Brazil divided on oil drilling proposal in the Amazon Delta

The proposal to drill oil off the mouth the Amazon River has revealed a rift within the cabinet of Brazilian President Luiz Inacio Lula Da Silva. This will be a test for his promises to stop environmental destruction.

The national oil and gas firm Petrobras filed an appeal against the rejection of its request to drill a well in the Foz do Amazonas basin or Amazon Mouth Basin, located 175km away from the northern coast.

Lula’s supporters are divided on the scheme. While he avoided taking a position, the leftist said that he did not believe it would have an ecological impact, given the distance of 500km between the deepwater site and the rainforest.

It’s not just about a wellhead. Brazil is a center of international environmental policy because of its large Amazon River and surrounding rainforest. This area contains a significant amount of carbon, which is vital to the protection of Earth’s climate. The area surrounding the proposed oil exploration site, say campaigners, is environmentally sensitive and close to coral reefs.

Industry figures, however, argue that tapping into the larger offshore region, also known as the Equatorial Margin and in which the block is located, is critical to maintaining the South American country’s status as an important global energy producer.

It would allow the country maintain its position as one of largest oil producers worldwide, said Adriano PIRES, founder of energy consultancy CBIE. He was also a former member on the oil regulator of the country. Local politicians in coastal areas who stand to gain from the production of oil and gas, including jobs and royalties, were also disappointed by the rejection of this plan.

Green activists welcomed the news, saying that the Amazon basin, which is home to mangroves, corals, and endangered species like dolphins and whales, would be at risk of harm if there was a spill.

Suely Araujo is a senior specialist in public policies at the non profit Climate Observatory. She said: “In midst of climate crisis, it’s important to ask whether Brazil should position itself as the last major oil seller.”

The controversy highlights the challenges that Lula faces as he tries to strike a balance between his campaign promises of environmental protection and economic growth in Latin America’s largest nation. The 77-year-old former trade unionist cast himself as champion of sustainability during his successful presidential run last year against far-right incumbent Jair Bolsonaro, who oversaw rising destruction of the world’s largest rainforest.

The Energy and Mining Minister Alexandre Silveira has criticised this refusal, calling the regulator’s demands of new studies “incoherent” and “absurd”.

Marina Silva, the environment minister who appointed the head to the regulatory agency, defended this process. “[A]ny technical decision is taken and respected in a republican government based on facts.”

Silva, an internationally-recognized fighter for environmental causes, held the same position during Lula’s first term in office. He quit in frustration, after losing several battles on environmental issues, such as large infrastructure projects in Amazon.

“It’s a big battle.” This time Silva is in a stronger position than [she was] before, because the environmental agenda has become more powerful,” said Pires.

The Equatorial Margin, a stretch of 2,200km of Atlantic coastline facing some of Brazil’s most impoverished states is known as the Equatorial Margin. Oil companies see it as a promising hydrocarbon frontier. CBIE estimates that it could contain up to 30bn barrels equivalent to oil, and about a quarter of this amount is recoverable.

ExxonMobil, the US oil giant, has already begun pumping crude oil from Guyana. The output from Brazil’s deep-sea reserves will peak at the end of this decade.

Pires stated: “We must find a way to respect the environment while not burying this wealth underground.”

Ibama (the environmental agency) vetoed Petrobras’s drilling application because it did not have enough evidence to show that the region was suitable for exploration.

The report also criticised the lack of measures to deal with wildlife contamination and communicate with indigenous communities nearby, as well as the response time to accidents.

Ibama was urged by 80 civil society groups and environmental groups including WWF, Greenpeace and others to delay granting a license until more detailed studies had been conducted.

Araujo was the former head of Ibama at the time it turned down a similar request from French oil giant TotalEnergies. He said that the plans didn’t include a system to coordinate with neighbouring countries if an accident occurred. She said: “I don’t believe that the decision will be reversed.”

Petrobras, the state-controlled company, insisted that it had met all licensing requirements after the rejection by the regulator. The company has pledged to take additional steps to protect the environment, and has said that the drilling activity is temporary and low-risk.

The company has earmarked almost half of its $6bn budget for exploration over the next five-year period to the Equatorial Margin.

The Energy and Mining Ministry did not respond to an inquiry for comment. Ibama was contacted by the Environment Ministry. The agency refused to give a timeline for the appeal, but stated that the process had to be completed within one year.

Concerns have mounted that Lula’s environmental agenda may be watered down by a conservative-dominated Congress, after lawmakers recently stripped powers from the environment ministry and the newly created ministry for indigenous peoples. Three and a half of the president’s term is left.

Mariana Borges is a political science professor at Oxford University. She said that the dilemma reflects wider tensions between growth and conservation in Brazil. She said that the conflict was still a major issue within government and society.