Petrobras to Appeal License Rejection for Drilling Near Amazon

Petroleo Brasileiro SA (Petrobras) has said it will seek reconsideration on the rejection of its application for drilling rights on a block considered to be near the mouth of the Amazon River, after the state-controlled company received support from the Mines and Energy Ministry.

Brazil’s environment authority had rejected Petrobras’ licensing application for FZA-M-59 on the Foz do Amazonas basin citing a lack of assessments that would assure the project would not pose environmental harms.

The Brazilian Institute of Environment and Natural Resources (IBAMA) noted in its decision it made public Wednesday the basin has a high environmental sensitivity owing to conservation and indigenous lands in its area.

Petrobras said in a statement Friday “it will exercise its right to file a Request for Reconsideration with the Presidency of IBAMA, in order to demonstrate compliance with all the requirements repeatedly presented by the federal licensing body during the licensing process”. It plans to submit the appeal this Wednesday.

Petrobras said it could maintain the rig in its current location until May 29 “without Petrobras incurring additional costs to those it has already been incurring due to the inconclusiveness of the environmental licensing process by IBAMA”.

Petrobras however said it will suffer “unjustified additional costs” while the pre-operational assessment remains delayed by the IBAMA’s decision.

Earlier Friday it said in another statement it had received a letter from the Mines and Energy Ministry telling it to pursue the license.

“The MME points out that, besides the strategic importance of sustainable exploration of the equatorial margin, considering the aspects related to energy security and maintenance of the country's self-sufficiency in oil, the issue is fundamental from the social point of view, since it proposes to leverage the development of some of the states with the lowest HDI [human development index] in the country, through the collection of government takes and the creation of jobs and income for its population”, read the statement.

In its initial statement to news about the rejection Petrobras said a failed pursuit of the block would result in a non-compliance fine as the company had made a commitment before the National Agency of Petroleum, Natural Gas and Biofuels.

It said in that statement published Thursday: “Petrobras reaffirms that the drilling of the well in this license’s scope is located at a distance of 175 kilometers from the coast of Amapá and more than 500 kilometers away from the mouth of the Amazon River”.

The IBAMA noted the rejection is the second for drilling activities on the mouth of the Amazon. In 2018 it denied licenses for TotalEnergies SE for five blocks under the French energy giant’s control.

To contact the author, email jov.onsat@rigzone.com