Brazil’s government announced on Tuesday that several oil companies secured rights to develop 19 offshore oil fields near the mouth of the Amazon River. This was part of the regular auctions conducted by the National Petroleum Agency, a state entity, which had put a total of 172 blocks up for grabs.
Lula’s government enthusiastically celebrated the outcome, highlighting that the auction “exceeded expectations” and represents an “absolute record” because it will contribute 180 million dollars to public coffers this year, double the amount initially projected.
Oil companies are expected to invest more than $260 million, each year to extract the oil.
Lula’s governments have historically been highly concerned with conservation efforts in the country and protecting Brazil’s environmental resources. This stance appears to have changed during his current term as President.
Indeed, the euphoria in the statement from the Ministry of Mines and Energy following the bidding contrasts sharply with the outrage of environmentalists and Indigenous groups, who protested outside the Rio de Janeiro hotel where the “Doomsday Auction” was held, as some banners said. The possibility of drilling for oil off the coast near the Amazon has been on the table for some time, and Brazil rushed to act after nearby Guyana discovered a large oil reserve that is transforming its economy.
Despite the Brazilian ministry’s excitement, it has also caused tensions within the government. The Brazilian state’s oil company, Petrobras, has continued mounting pressure to exploit the area’s oil reserves, but some permits have proven more challenging than anticipated to obtain. President Luiz Inácio Lula da Silva went so far as to say that the agency responsible for giving the final green light was “beating around the bush.”
Experts state that Tuesday’s auction indicates the government’s firm intention to open a new oil frontier along the country’s northern coast. This move comes as the pre-salt oil fields—crude deposits buried thousands of meters deep beneath a salt layer off the southeastern coast—are projected to run dry in a few years.
The government has also explained that further oil exploration in the northern region of the country can be sustainable. Mines and Energy Minister Alexandre Silveira said, “This result shows that we are on the right path. Sustainability also means regional development, fighting inequality, and more opportunities for the population.”
Brazilian company Petrobras, with the state as its main shareholder, is leading many of the concessions granted in this auction, along with U.S. companies Exxon and Chevron, and China’s CNPC. The contracts will be signed in October, and another auction will also take place that month, just days before Brazil hosts the COP30 climate summit. Ironically, it will be held in the Amazonian city of Belém do Pará, not far from where those future oil wells will be located.
