Exploration success in neighbouring fields trumped environmental and permitting concerns for hopeful drillers in Brazil's offshore Foz do Amazonas region.
State-controlled Petrobras' delays in drilling there and protests from environmental and indigenous groups failed to deter foreign interest in the frontier exploration region in Brazil's latest auction of oil and natural gas blocks on 17 June. The Foz de Amazonas lies in a strip of deposits known as the equatorial margin — near the equator in South America — which includes prodigious fields in Guyana.
Nine firms were awarded concessions to explore 34 blocks out of 172 offered, with the Foz do Amazonas receiving the most interest. The areas that received bids may contain 6bn bl of recoverable reserves, Heloisa Borges, a director of studies at Brazil's energy research bureau, says. ExxonMobil, Chevron, Petrobras and Chinese state-owned CNPC took shares in 19 blocks in Foz do Amazonas.
The high interest comes despite Petrobras being denied a licence to drill in the Foz de Amazonas in 2023, with environmental watchdog Ibama citing "worrying inconsistencies" for the operation in a new exploration frontier of "high socio-environmental vulnerability". But the firm inched closer to receiving the licence last month, when Ibama approved its emergency plan to protect fauna in the event of an oil spill. The interim director of hydrocarbons regulator ANP Patricia Baran — who said the auction "exceeded expectations" — agreed that the success was a sign that Petrobras' environmental licensing process is progressing.
Mines and energy minister Alexandre Silveira said after the auction that he "is sure" Ibama will speed up licensing in the Foz do Amazonas. The final licensing step could come in the second half of July, Petrobras chief executive Magda Chambriard said recently. Yet it will be hard to issue "fragmented and successive exploration licences" in the Foz do Amazonas without the AAAS, a complex environmental study, Ibama has noted. Officials have also said that a successful auction could clog the watchdog's queue for licences.
But exploration success in Guyana apparently eased some concerns. An ExxonMobil-led consortium started producing there in 2019 and is now delivering about 650,000 b/d from three projects in the deepwater Stabroek block. Guyana's government expects production to rise to 900,000 b/d by end of 2025 with a fourth project. Every expansion in Guyana "increases confidence in Foz do Amazonas' potential", Borges says.
More than marginal interest
Brazil is seeking to increase its oil production to a peak of 5.3mn b/d in 2030 from 3.6mn b/d in 2024. The latest auction also saw the government award areas in the pre-salt Santos basin, the southern Pelotas basin and a single block in the onshore Parecis basin. Shell, Norwegian state-controlled Equinor and Australia's Karoon bought a combined 11 blocks in the pre-salt.
Reserves there are dwindling, but the region still produced almost 80pc of Brazil's oil and gas in April, according to ANP. France's TotalEnergies will continue to focus there rather than in new Brazilian frontiers, it said last month. Shell's strategy coming into the auction was to consolidate its position in the region, the major's general manager of exploration and development Lucio Prevatti said.Brazil will auction 13 other blocks in those areas in October, under the country's production-sharing regime, which TotalEnergies' Brazil chair Olivier Bahabanian said was of more interest to the firm.
The Potiguar basin, also in the equatorial margin, was the only area which received no bids. Companies may have avoided the area given Shell's struggles in receiving environmental permits to explore the nearby Barreirinhas basin.
