Brazil’s government announced yesterday that several oil companies have won the rights to explore 19 offshore oil fields near the mouth of the Amazon River. This was part of the regular auctions conducted by the National Petroleum Agency, a state entity, which had put a total of 172 areas up for bid.
President Lula’s government celebrated the outcome with great enthusiasm, highlighting that the auction “exceeded expectations” and represents an “absolute record,” as it will contribute 989 million reais (180 million dollars) to public coffers this year—double the amount initially projected.
Oil companies are also expected to invest nearly 1.45 billion reais (more than 260 million dollars) annually to extract the oil.
Brazil’s new oil fields have sparked controversy with local conservationists
Historically, Lula’s government’s were highly concerned with conservation efforts in the country, and protecting the environmental resources in Brazil. This stance has seemingly changed during his most recent term as President of the country.
Indeed, the euphoria in the statement from the Ministry of Mines and Energy following the bidding contrasts sharply with the outrage of environmentalists and Indigenous groups, who protested outside the Rio de Janeiro hotel where the “Doomsday Auction” was held, as some banners said. The possibility of drilling for oil off the coast near the Amazon has been on the table for some time, and Brazil rushed to act after nearby Guyana discovered aa large oil reserve that is transforming its economy.
Despite the Brazilian ministry’s excitement, it has also caused tensions within the government. The Brazilian state’s oil company, Petrobras, has continued to mount pressure to exploit the areas oil reserves, but some permits have proven more challenging than anticipated to obtain. President Luiz Inácio Lula da Silva went so far as to say that the agency responsible for giving the final green light was “beating around the bush.”
Brazil’s government is determined to open a new frontier for oil exploitation in the country
Experts say tuesday’s auction shows that the government remains firm in its intention to open a new oil frontier along the country’s northern coast, given that the pre-salt oil fields, crude buried thousands of meters deep beneath a salt layer off the southeastern coast, are expected to run dry in a few years.
The government has also explained that furthering oil exploration in the northern region of the country, can also be sustainable. Mines and Energy minister Alexandre Silveira said, “This result shows that we are on the right path. Sustainability also means regional development, fighting inequality, and more opportunities for the population.”
Brazilian company Petrobras, with the state as its main shareholder, is leading many of the concessions granted in this auction, along with U.S. companies Exxon and Chevron, and China’s CNPC. The contracts will be signed in October, and another auction will also take place that month, just days before Brazil hosts the COP30 climate summit, which, ironically, will be held in the Amazonian city of Belém do Pará, not far from where those future oil wells will be located.
President Lula wants to turn COP30 into a major showcase to position Brazil as a global leader in green diplomacy, and he will surely use the favorable data on the fight against deforestation to boast before the international community.