Brazil auctions off several Amazon oil sites despite protests

A protester in Brazil wearing a whale mask holds a sign that reads in Portuguese, “No oil in the Amazon.”  (AP Photo/Silvia Izquierdo)

BRASILANDIA, Brazil — Brazil auctioned off several land and offshore potential oil sites near the Amazon River on Tuesday. It aims to expand production in untapped regions despite protests from environmental and Indigenous groups.

The event came months before Brazil is to host the UN’s first climate talks held in the Amazon. The protesters outside Tuesday’s venue warned of potential risks that oil drilling poses to sensitive ecosystems and indigenous communities in the Amazon.

A luxury Rio de Janeiro hotel hosted the auction conducted by the National Oil Agency. Most of the 172 oil blocks for sale are located in areas with no current production. These include 47 offshore locations close to the mouth of the Amazon River. There are also two sites inland in the Amazon near Indigenous territories.

Nineteen offshore blocks were awarded to Chevron, ExxonMobil, Petrobras and CNPC. The oil companies see the area as highly promising because it shares geological characteristics with Guyana. There, some of the largest offshore oil discoveries of the 21st century have been made.

This region is considered to have high potential risk due to strong currents and the proximity to the Amazon seashore.

Brazil’s emergency plan

Under public pressure from President Luiz Inácio Lula da Silva, the Brazilian Institute of the Environment and Renewable Natural Resources, known as IBAMA, approved an emergency plan. It allowed state-run Petrobras to conduct exploratory drilling in a block near the mouth of the Amazon River. This is the last step to grant an environmental license.

“It’s regrettable and concerning that blocks are being acquired in a basin that has not yet received environmental licensing,” said Nicole Oliveira. She is executive director of the environmental nonprofit Arayara, which tried to block the auction in court.

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“This is an irresponsible move by the National Oil Agency and a very risky one for the companies involved,” Oliveira told The Associated Press. “We will continue litigating to prevent the contracts from being signed and the blocks from being explored.”

The auction wrapped up with only 34 oil blocks awarded.

Brazil´s oil agency noted that the signing bonuses — one-time payments made by the winning companies — totaled $180 million. This is a record for auctions of this kind. 

An agency representative said the highest premium was for a block located near the mouth of the Amazon River. It drew a nearly 3,000-percent markup.

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Oliveira took part in a peaceful protest that gathered about 200 people outside the auction site, from environmentalists to indigenous leaders.

“We came to Rio to repudiate the auction,” said Giovane Tapura of the Manoki, an Amazon tribe. “We would have liked to be consulted and to see studies on how the oil drilling could affect us. None of this has been done.”

Energy diversification strategy

In a recorded opening statement at the start of the event, Brazil’s National Oil Agency said the auctions are part of the country’s energy diversification strategy. This is aimed at transitioning to a low-carbon economy. 

Also, the agency said contracts signed with the winning companies include measures to reduce carbon intensity in production activities. Further, there are mandatory investments in energy transition projects.

Brazil has increased crude oil production, which became the country’s top export for the first time last year, surpassing soybeans.

The auction is part of the federal government’s goal to maintain and even expand output beyond 2030. By then, production from current oil blocks under exploration is expected to decline. Brazil gets most of its electricity from hydropower and other green energies.

The UN climate talks will be held in the city of Belem, close to the mouth of the Amazon. Critics say it’s a contradiction that Brazil’s president is pushing for increased fossil fuel production while trying to cast himself as an environmental champion.