Foz do Amazonas: understand what is at stake in the new oil exploration frontier

(epbr) The equatorial margin, the region where the promising Foz do Amazonas Basin is located, has already been called the “new pre-salt layer” by the Minister of Mines and Energy, Alexandre Silveira (PSD), and is an important part of Petrobras’ exploratory strategy in the coming years. years.

But, due to lack of environmental licensing, no well has been drilled at the site since the blocks were tendered a decade ago. Three governments – Dilma Rousseff, Michel Temer and Jair Bolsonaro – have already passed, without a solution to the impasse surrounding the release of exploratory campaigns in the region.

Understand, below, what is at stake in this dispute between oil companies and environmentalists.

Foz do Amazonas Basin is located within the equatorial margin and lies between Amapá and Pará;

Border is considered of great potential, close to Suriname and Guyana – where more than 11 billion barrels of oil have already been discovered;

Foz exploratory blocks were auctioned in the 11th round, in 2013, in Brazil;

Since then, no wells have been drilled in the area;

TotalEnergies and BP left the project, leaving Petrobras as the operator of the blocks

Petrobras has set aside US$3 billion in the 2023-2027 plan for drilling 16 exploratory wells on the equatorial margin;

Oil company spends more than US$ 500,000 per day with rig stopped at the site

License was never issued by Ibama;

Minister of the Environment and new president of Ibama defend more in-depth environmental studies;

Type of study required for licensing is stalled for three governments;

Technicians from various bodies say the decision will be political rather than technical.

Why Explore Foz do Amazonas

The need to explore new frontiers is inherent to the oil industry. Oil and natural gas reserves are finite and therefore companies constantly need to look for new resources.

The pre-salt is, today, the great source of Brazilian oil, being responsible for 78% of the national production. But even the country’s most fruitful frontier will, at some point, go into decline.

Tupi, the largest oil and gas field in the country, for example, has entered a production decline phase and will need to receive more revitalization investments in the coming years.

And the Energy Research Company (EPE) estimates that, if new discoveries are not made, oil production in the pre-salt layer will reach its peak between 2029 and 2030, of 4.3 million barrels/day — and will enter, in then on a downward curve.

Petrobras’ newest exploratory bet is on the equatorial margin – the coast that runs from Rio Grande do Norte to Oiapoque (AP) and includes the Foz do Amazonas, Pará-Maranhão, Barreirinhas, Ceará and Potiguar basins.

In neighboring Guyana, production is already a reality

Foz do Amazonas is a highlight among the basins on the equatorial margin, due to its geological similarity with Guyana.

With a land area 40 times smaller than Brazil, Guyana already has more than 11 billion barrels in proven reserves. For comparison purposes, Brazil had, in 2022, 14.8 billion barrels, according to the National Agency of Petroleum, Natural Gas and Biofuels (ANP).

While Brazil is debating whether or not to drill in the region, the neighboring country started producing in 2019 and, at an accelerated pace of development of its reserves, should reach 1.7 million barrels/day in 2035, according to projections by the Rystad Energy consultancy. Today, it produces around 380,000 barrels/day.

The environmental issue

Foz do Amazonas began to attract the attention of the major oil companies, more intensely, in the early 2010s.

One of the main companies to bet on the potential of the area was the French company TotalEnergies, which in 2013, in the 11th Round of concessions, paid BRL 250 million for five blocks in the basin.

The project, however, ran into licensing. In 2018, Ibama denied the French company’s request for drilling at Foz do Amazonas, citing “profound uncertainties related to the project’s Individual Emergency Plan (PEI), aggravated by the possibility of an eventual oil spill affecting the biogenic reefs present in the region and marine biodiversity more broadly”.

TotalEnergies then withdrew from the business. Petrobras took over the stakes of the French multinational and BP in the five concessions, where it was a partner, and is now trying to proceed with the licensing.

The Brazilian oil company has open licensing processes at Ibama to drill up to 14 wells in Foz do Amazonas. These are requests for “one-off” licenses, in which companies present studies and requests for specific campaigns.

The Minister of the Environment, Marina Silva, however, has already signaled that the licensing for drilling in Foz do Amazonas must start from an integrated assessment of the basin. She stated that a project in the region “cannot be licensed as an isolated case”.

The position was accompanied by the new president of Ibama, Rodrigo Agostinho. He has already said that the Strategic Environmental Assessment “is a real possibility and is under analysis right now”.

Environmentalists call for more in-depth studies

Environmentalists question environmental safety, the risk of an eventual leak reaching the coast, including in neighboring countries.

And they also see in the exploration of the equatorial margin the opening of a frontier – which, if successful, will mean an increase in the production of a fossil source, oil, beyond what is projected for Brazil in the coming decades.

Last week, 80 civil society organizations came together to ask that Ibama not authorize Petrobras to start drilling at Foz, until an AAAS – an acronym for Environmental Assessments of Sedimentary Areas (AAAS), is carried out, a type of strategic assessment .

The AAAS consists of multidisciplinary studies that help support the strategic planning of public policies for the exploration and production of oil and natural gas

The objective is to identify potential socio-environmental impacts of oil and gas exploration and production activities and, thus, contribute to the definition of whether or not certain areas are suitable for bidding – or whether they require a moratorium for the development of solutions for safe oil exploration. and gas.

The mechanism was created in 2012, in the second year of Dilma Rousseff’s government, by the Ministries of Mines and Energy (MME) and the Environment (MMA). A year later, the blocks on the equatorial margin were auctioned in the 11th round, but carrying out AAAS for the region was never a priority.

So far, AAAS have been contracted for the Sergipe and Jacuípe offshore basins; and to Solimões, in Amazonas, on land.

The last stage of an AAAS is decision-making by an interministerial commission formed by the MME and MMA, which never came into operation. It was extinguished by a decree in 2019, in the government of Jair Bolsonaro (PL), before the completion of the contracted studies.

Legally, these studies are not mandatory for issuing environmental licenses by Ibama.

Petrobras asks for definition on the matter

The president of Petrobras, Jean Paul Prates, defends that the country needs to decide, after all, if it wants to explore Foz do Amazonas: “The Brazilian State will have to decide if this goes ahead or not”.

When commenting on the company’s strategies for the energy transition, he highlighted that the plan is to maintain investments in oil and gas – and expand exploratory frontiers –, financing new segments in the energy area.

Block FZA-M-59, where Petrobras intends to start the exploratory campaign, in deep waters, is more than 400 km from the mouth of the Amazon River itself. The well is designed 160 km from the north coast of Pará.

In 2013, ANP geologists estimated, based on existing preliminary studies, that the entire area on offer could have 14 billion barrels of oil in situ – that volume originally contained in a reservoir.

Petrobras argues that the broader socio-environmental impacts may occur not during drilling (object of the license request), but in the production and flow phase.

In March, under new management, the company suggested to Ibama that the strategic study be carried out after the drilling of the wildcat well, the object of the licensing request.

MME endorses defense of exploration of the area

In March, the Ministry of Mines and Energy launched Potencialize E&P, a program designed to encourage an increase in independent exploration and production activities in the country. The folder reiterates the expectation that Petrobras will obtain the license to drill in Foz do Amazonas.

Minister Alexandre Silveira said that exploring the equatorial margin is guaranteeing a “passport to the future” for the North and Northeast regions. For the minister, the region is the “new pre-salt layer” in Brazil.

The opposition to the project in Foz do Amazonas by environmentalists and the support of politicians and economic sectors – inside and outside the government – lead technicians from different bodies to privately recognize that the decision will be up to the Planalto. And it will ultimately be politics.

“Since the end of January 2023, Petrobras has had a drilling rig stopped in deep water off the coast of the state of Amapá, at a cost of more than US$ 500,000 per day, awaiting the issuance of the proper license”, pointed out the MME, by launching Potencialize E&P.

Petrobras has mobilized personnel and equipment to the base of operations in Belém, Pará, including a drillship contracted with Brazilian operator Ocyan. Costs are in the hundreds of thousands of dollars a day.

The decision to anticipate these expenses was taken last year, even without the issuance of the license. There are incident response teams and infrastructure installed in the region to carry out a simulation.

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