Petrobras resists order to assess Indigenous impact of Amazon drilling

By Thomson Reuters May 14, 2024 | 4:38 PM

By Fabio Teixeira and Marta Nogueira

RIO DE JANEIRO (Reuters) – Brazil’s state-run oil firm Petrobras is resisting regulatory demands requiring it to assess the impact on Indigenous groups of drilling in an offshore basin near the mouth of the Amazon River, Chief Exploration and Production Officer Joelson Mendes told journalists on Tuesday.

Brazil’s environmental agency Ibama demanded the studies, first reported by Reuters last week, before considering the company’s appeal to grant a drilling license in the area.

“Petrobras won’t do these studies at this stage of the licensing process, because they are not legal,” Mendes told a news conference discussing quarterly earnings.

The director said he expects Brazil’s solicitor general to intervene on the company’s behalf, as it considers the request for new studies “not adequate at this point in the licensing process.”

The refusal could heighten tensions between the oil company and the regulator, which denied a license for Petrobras to drill in the area about a year ago, citing possible impacts on Indigenous groups and the sensitive coastal biome.

Days after Ibama’s denial, Petrobras appealed and the company is still waiting for Ibama’s final ruling.

The offshore basin, a part of the so-called Equatorial Margin known as Foz do Amazonas, is considered Brazil’s most promising frontier for oil exploration because it shares geology with nearby Guyana, where Exxon is developing huge fields.

Beyond the licensing delays in the Equatorial Margin, Ibama could also impact Petrobras’ production this year due to a labor strike by the agency’s staff, said Mendes, which he warned could delay the expansion of operations.

“It is possible that we will have impacts of the order of magnitude of 2% of annual production, if the situation persists.”

(Reporting by Fabio Teixeira and Marta Nogueira; Editing by Brad Haynes and Aurora Ellis)