Petrobras' Efforts to Drill in Brazil's Foz do Amazonas Block Stalled by License Issues

Credit: Petrobras
Credit: Petrobras

Brazilian state-run oil company Petroleo Brasileiro SA is struggling to get a license that it needs to drill the ultra-deep waters of the Foz do Rio Amazonas Basin this year as planned, a source close to the matter told Reuters on Thursday. 

Petrobras has been spending millions of dollars a day to mobilize personnel and equipment to conduct a simulation in the Amazon region that it needs to obtain the license from Brazil's environmental regulator Ibama. 

It has been trying to turn the basin into a new oil exploration frontier, in a region close to Guyana, where Exxon Mobil made important discoveries. The license from Ibama is needed before the company can operate the long-awaited well on the coast of Amapa state. 

Giants such as BP and TotalEnergies have withdrawn from assets auctioned in 2013 due to difficulties in environmental licensing. 

The simulation, initially scheduled to start on the second half of December, has not yet started, as the oil company awaits for state license from Para state to install a small hospital for oiled birds in its capital Belem, the source said. 

Foz do Amazonas is located in a vast region of the Brazilian coast known as the Equatorial Margin, which runs from Rio Grande do Norte to Amapa, where Petrobras' current management plans to invest $2.94 billion by 2027, while seeking ways to replenish reserves and avoid declining future production. 

Exploration at Foz do Amazonas -with little-known geology and rich ecosystems- faces strong opposition from environmental groups and local communities, while faces questions from the Federal prosecutors in Para and Amapa, who fear environmental impacts in sensitive areas. There are also political opposition. 

Last month, Workers Party said it was considering suing to court to interrupt the licensing process for Foz do Amazonas drilling in Foz do Amazonas, a representative of the party's environmental group said. Petrobras confirmed that it depends on Para's license to carry out the work and is "making the necessary effort" to obtain it. 

Semas, Para's state body responsible for issuing the license, did not immediately respond to requests for comment. 

($1 = 5.3054 reais) 

(Reporting by Marta Nogueira, writing by Carolina Pulice; Editing by David Gregorio)

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