Petrobras Wins Years-Long Fight to Explore for Oil Near Amazon

A Petrobras vessel anchored in Angra dos Reis, Rio de Janeiro, in 2021. Photo by Dado Galdieri /Photographer: Dado Galdieri/Bloo

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(Bloomberg) — Brazil’s state-controlled energy company received approval to explore for oil near the mouth of the Amazon River, capping a yearslong standoff with environmental regulators over access to a basin thought to hold vast amounts of crude.

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Petroleo Brasileiro SA said in a filing Monday that it received permission to drill an exploratory well in the Foz do Amazonas basin. 

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“The drill is at the well site and drilling is scheduled to begin immediately, with an estimated duration of five months,” the company said in its filing.

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The world’s biggest oil companies have salivated for a decade over the prospect of drilling in the area, in deep Atlantic waters off Brazil’s north coast. It’s especially tempting for Petrobras as output from Brazil’s existing oilfields is expected to peak around 2030. Yet environmentalists have fought bitterly against the move, warning an oil spill could imperil the ecosystem at the Amazon’s mouth to the south.   

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The battle over Foz do Amazonas underscores Brazil President Luiz Inacio Lula da Silva’s competing priorities of growing the nation’s economy while also championing the environment ahead of the UN climate conference, COP30, he is hosting in November. 

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While the basin is 330 miles (530 kilometers) from the river itself, environmentalists warn powerful currants could quickly drive any spilled oil into the delicate marine environment fed by the Amazon’s freshwater outflow, endangering the ecosystem and posing a threat to coastal indigenous populations that depend on the region for fishing. 

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Exxon Mobil Corp.’s discovery of billions of barrels further north in Guyana has boosted interest from oil giants in Foz do Amazonas and the wider region known as the Equatorial Margin. Petrobras compares its geology to the Campos Basin in the southeast that made the company a leading offshore producer in the late 20th Century. 

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More than 70% of Brazil’s production is currently in a deep-water area known as the pre-salt, but Petrobras and other explorers haven’t made any significant discoveries in more than a decade. 

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A series of failed exploration campaigns in the pre-salt have put the long-term future of Brazil’s oil industry in doubt. Production is expected to peak around 2030 and then start declining unless Petrobras discovers more large fields. Chief Executive Officer Magda Chambriard has even warned about Brazil becoming a net importer in the 2030s.

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“Petrobras is running out of places to drill,” said Andre Fagundes, who covers Brazil for energy consultancy Wellingence Inc. “What other long-term prospects do they have in the pipeline?”

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In June, Brazil auctioned 19 out of 47 blocks offered in Foz do Amazonas, making it the most competitive of the five basins where acreage was available despite environmental activists’ protests. Petrobras, Exxon Mobil Corp., and Chevron Corp. won exploration rights in the area, anticipating that the nation’s environmental regulator would soon open the promising offshore oil region for drilling.