May 7, 2020
President Jair Bolsonaro signed a decree that qualifies a pilot project for evaluations in the country on the exploration of unconventional oil and gas (shale) for the Federal Government’s Investment Partnership Program (PPI). The inclusion of the initiative in the PPI aims to “support environmental licensing and other measures necessary for the viability” of the project, according to a publication in the Federal Official Gazette. The so-called ‘shale’ oil is more expensive to extract than conventional oil, in addition to offer more environmental risks. Therefore, its extraction requires that oil prices be at a higher level to offer financial returns, completely different from the current moment, when the commodity is hitting consecutive records of low.
The project has been called by the government a “transparent well” and aims to produce knowledge about the feasibility of using resources onshore from unconventional reservoirs. The initiative is part of a plan by the Ministry of Mines and Energy to revitalize oil and gas exploration in onshore areas, known by the acronym REATE. In December, the portfolio defended that the “transparent well” aims to “seek technical, legal and legal framework” to allow the exploitation of unconventional oil and gas in an environmentally safe manner in the country.
Projects qualified to PPI are treated as a national priority. This streamlines the processes and acts of public agencies for their viability. President Bolsonaro also qualified as part of the PPI the 17th Bidding Round for exploratory blocks of oil and gas under concession and the A-5 and A-4 energy auctions for contracting existing energy generation projects. The autionss, however, are suspended for the time being, after determination by the Ministry of Mines and Energy amid the uncertainties generated by the coronavirus pandemic.