A proposal to drill for oil in the sea off the mouth of the Amazon river has exposed a rift in the cabinet of Brazilian president Luiz Inácio Lula da Silva, lining up an important test of his pledges to halt environmental destruction.
National oil and gas company Petrobras has lodged an appeal after the environmental agency rejected its request to drill an exploratory well in the zone known as the Foz do Amazonas, or Amazon Mouth basin, some 175km from the country’s northern coast.
The scheme has split opinion among Lula voters, and while the leftwinger has avoided taking a firm position, he has said he found it “difficult” to believe the activity would cause ecological problems given the 500km distance between the deepwater site in the Atlantic Ocean and the rainforest.
More than just a single wellhead is at stake. Environmental policy in Brazil draws international attention because it is home to a large portion of the Amazon river and its surrounding rainforest, a store of carbon critical to protecting the earth’s climate. Campaigners say the area around the proposed oil exploration site is ecologically sensitive and near coral reefs.
Yet industry figures argue that tapping the wider offshore region in which the block lies, known as the Equatorial Margin, is crucial to the South American nation’s continued status as a globally important energy producer.
“It would allow the country to maintain its role as one of the largest oil producers in the world,” said Adriano Pires, founder of the energy consultancy CBIE and a former member of the country’s oil regulator.
The rejection of the drilling plan also dismayed local politicians from coastal areas that stand to benefit from jobs and royalties if production eventually goes ahead.
But it was welcomed by green activists, who say the basin at the mouth of the Amazon — home to corals, mangroves and endangered species such as dolphins and whales — would be vulnerable to harm in the event of a spill.
Suely Araújo, senior specialist in public policy at the non-profit Climate Observatory, said: “In the midst of the climate crisis, the question that must be asked is whether it makes sense for Brazil to position itself as one of the last major oil sellers.”
The controversy underlines the challenges for Lula as he seeks to balance campaign pledges of ecological protection and economic development in Latin America’s most populous 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.
Energy and mining minister Alexandre Silveira, who previously described exploration in the region as a “passport to the future”, has criticised the permit refusal and called the regulator’s demands for new studies “incoherent and absurd”.
But environment minister Marina Silva, who appointed the head of the regulatory agency, defended the process: “[A] technical decision in a republican [and] democratic government is carried out and respected based on evidence.”
An internationally renowned fighter for green causes, Silva occupied the same post during Lula’s first stint in office — before quitting in frustration after losing a series of battles over environmental issues, including large infrastructure projects in the Amazon.
“It is a big fight. This time Silva has more power than she had in [in the past] because today the environmental agenda is stronger,” said Pires.
The Equatorial Margin is a 2,200km stretch of the Atlantic facing the coastlines of some of Brazil’s poorest states. Oil companies consider it to be a promising new hydrocarbon frontier. It is estimated to contain as much as 30bn barrels of oil equivalent, of which about a quarter could be recoverable, according to CBIE.
Discoveries have been made offshore from neighbouring Suriname and Guyana, with US oil giant ExxonMobil already pumping crude from the latter. Output from Brazil’s other main deep-sea reserves is due to peak by the end of the decade.
Pires said: “We have to find a middle ground, respecting the environment, but without leaving this level of wealth buried underground.”
The environmental agency, Ibama, vetoed Petrobras’s drilling application on the grounds that it lacked evidence showing that the wider region is suitable for exploration.
It also said measures outlined for dealing with contaminated wildlife and communication with nearby indigenous communities were inadequate, and criticised the time it would take to respond to any accidents.
Eighty civil society and environmental groups, including WWF and Greenpeace, had earlier urged Ibama not to grant a licence until further detailed studies were carried out.
Araújo, who was formerly the head of Ibama when it rejected a similar request by French oil major TotalEnergies, said the plans did not include an adequate system for coordinating with neighbouring countries in case of accidents. She added: “I do not believe there will be a reversal of the decision.”
After the regulatory rebuff, state-controlled Petrobras insisted it had complied with all the requirements of the licensing process. It has promised to include additional measures to protect the environment and said the drilling is a temporary, low-risk activity required to check for the existence of oil reserves.
The company has allocated almost half its $6bn exploration budget over the next five years to the Equatorial Margin.
The energy and mining ministry did not respond to a request for comment, while the environment ministry referred questions to Ibama. The agency declined to provide a timeframe for the appeal but said the process must be concluded within a 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. The president has three and a half years of his term remaining.
The dilemma reflects broader tensions in Brazil between conservation and growth, said Mariana Borges, a political scientist at the University of Oxford. “It shows that this conflict is still very big within the government and society,” she said.