Brazil awarded exploration rights to five offshore oil blocks on Wednesday, doubling down on a controversial drive to boost production in the run-up to UN climate talks it is hosting next month.
The auction came two days after state oil giant Petrobras was granted a controversial license to explore near the mouth of the Amazon river, a sensitive and biodiverse region.
Brazil awarded rights to five of seven blocks on offer, raising 103.7 million reais (US$19.1 million) from several major foreign groups, including Norway’s Equinor and China‘s CNOOC.
The oil blocks are located in Brazil’s southeast, off the coast of Rio de Janeiro and Sao Paulo.
It is a “pre-salt” area that contains oil deposits trapped under a thick salt layer in deep water, and has already helped Brazil become the world’s eighth-largest oil producer.
The winning companies have committed to donating a portion of their profits to the Brazilian government. The minimum investment planned for the five blocks is around US$83 million.
“We are very satisfied with the result, which exceeds our expectations,” Artur Watt, director general of the National Petroleum Agency (ANP), which organized the auction, told a press conference.
Equinor won two blocks, one of which it will operate alone, and another with Petrobras.
Petrobras said it had already begun drilling 500km from the mouth of the Amazon River on Monday, the same day the license was granted.
The region, known as Foz de Amazonas, is part of a promising new offshore oil frontier, with nearby Guyana emerging as a major producer in less than a decade following large offshore discoveries.
Environmentalists criticise the project as risky and unnecessary in a world which should be moving away from fossil fuels.
However, President Luiz Inacio Lula da Silva and his government staunchly defend it as necessary to secure the energy supply and a means to fund the climate transition.
“Maintaining (oil) exploration and production is fully compatible with the energy transition,” said Watt.
He said the shift from fossil fuels to renewables must be accelerated, but “we can never consider voluntarily restricting supply (in Brazil), as it would quickly be filled by other countries, to the detriment of national interests”.
