Exploring oil in the Amazon depends on Lula, says former ANP – 03/23/2023 – Market

Technical discussions on the exploratory progress of oil from areas in the basin at the mouth of the Amazon River, auctioned ten years ago, have already been exhausted and a decision now depends on President Lula, Magda Chambriard, the former director-general of the regulator ANP, told Reuters. .

Petrobras and companies such as BP and TotalEnergies have already invested hundreds of millions of dollars in the region in studies and works in recent years, but still have not obtained environmental approval for drilling in the basin, which is seen as a new exploratory frontier for the country and essential for the future of the industry after the pre-salt.

This month, Ibama again asked the state-owned company for information in the ongoing licensing process for block FZA-M-59, saying that the company did not deliver all the necessary data.

This once again frustrated the oil company’s expectations of progress in drilling a well. The block has been operated by Petrobras since BP gave up the asset in 2020 amid difficulties obtaining the license.

“There’s nothing more to discuss about it, ten years have been enough,” said Chambriard, who was ahead of the ANP in 2013, when areas in the region were awarded at auction, with great competition and goodwill.

For the specialist, from a technical point of view, the subject is already exhausted and needs to be mediated by the President of the Republic, who needs to decide geopolitically what to do.

Since last year, Petrobras has been, at the request of Ibama, mobilized with a large structure to carry out an emergency simulation at the mouth, at a daily cost of R$ 3.4 million. The activity would be the last requirement for the drilling license, but it has not yet been released.

The advance in the region raises environmental concerns, due to the richness of ecosystems and the little geological knowledge, at a time when the world is moving towards an energy transition.

The president of Ibama, Rodrigo Agostinho, told Reuters this week that the previous government did not carry out a technical analysis of the entire region as it should have been done, which makes it difficult to assess the situation so far, in his assessment.

Chambriard, however, pointed to seeing an impasse within the government and resistance from an environmental point of view for the project to move forward.

“This impasse, where one part of the government wants it and another part doesn’t, it’s the President of the Republic who has to define it. , said the expert, who was part of the federal government’s transition team.

Jean Paul Prates, president of Petrobras, has already said that exploration of the Equatorial Margin is important for the state-owned company to replenish its reserves, although the new management of the oil company is also considering investing more in renewable energy.

FUTURE OF THE INDUSTRY

For Chambriard, however, Petrobras’ future as a strong company depends on breaking new ground, as “the pre-salt layer is not infinite”.

“If the Brazilian government wants a strong state-owned company, it cannot give up the continuation of exploration of the relevant borders for the country. Otherwise, you exhaust an important player in 20 years and after that what do you do with Petrobras, which is being a company primarily E&P (exploration and production)?”, said the former general director of the ANP.

The basin at the mouth of the Amazon River is on the Brazilian equatorial margin, which runs along the coast of Rio Grande do Norte to Amapá. According to ANP data, the extensive area has a very high potential for new discoveries, like the exploratory success achieved in the similar sedimentary basins of Guyana, Suriname and the West African coast.

The last drilling of an exploratory well on the Brazilian equatorial margin, however, took place in 2015.

Chambriard pointed out that the Tupi field (formerly Lula), in the pre-salt of the Santos basin, currently the largest producer in Brazil, has been in decline for two years.

According to her, there are other important pre-salt fields to be developed, but they are not of the same size as areas like Tupi, Búzios and Mero.

“It’s past time for Brazil to focus on exploring a new frontier and the new frontier is the mouth of the Amazon. We are already ten years late, Brazil will pay that price,” he said.

“It is important to know that whoever is preventing this development at the mouth is also contributing to the shrinkage of Petrobras in the medium term. This has to be clarified, because this is a government choice.”

According to Chambriard’s calculations, the lack of a relevant new horizon for Petrobras means that, in ten or 15 years, the company will be operating 90% of national production and keeping 55% of oil. “Is that exactly what is expected, is this the national policy that is being constructed?”