Brazil's Equatorial Margin lags behind the country's environmental legislation

Rio de Janeiro (RJ) - Brazil's offshore potential has been largely known for its huge volume of oil reserves in its pre-salt layer. Yet for some other operators, the opportunities are beyond the ultra-deep waters situated in two important Brazilian bases - Santos and Campos. With an estimate of 30 billion barrels of oil in situ located in an area of 75,6 million square kilometers, the so-called Equatorial Margin, in Brazil's northern region, can be considered as a new highly profitable offshore frontier in the country.

In fact, after a recent and very successful exploratory campaign in the Guyana’s coast, which resulted in the discovery of two wells in Liza field, Exxon announced in February an investment plan to drill 1.4 billion barrel in Liza field by the end of 2017.  Those discoveries reinforced the previous expectation for great operations in the Brazilian region, mainly because the big geological similarities between the Guyana's coast and Brazil's north coast. The Guyana’s oil field is only 50 kilometers away from the Brazil’s Equatorial Margin area.

International majors such as Total, Exxon, BP as well as local independent operators like Queiroz Galvão E&P (QGEP) and PetroRio are among the companies that acquired 172 blocks offered in the 11^th Bidding Round in 2013.

“Considering the recent findings in Guianas and Suriname, other operators might also achieve success in their exploratory activities,” says QGEP CEO Lincoln Guardado.

QGEP CEO Lincoln Guardado

Delays in Licensing issuing

Although its potential is abound, many operators are facing problems to start their initial exploration plan. Most of those problems are related to the environmental licensing, which is issued by Brazil’s Federal Environmental Regulator, Ibama,  especially for the Foz do Amazonas blocks, which has a total area of 268 thousands square kilometers.

According to Brazil’s National Petroleum Agency ANP, from 172 blocs auctioned, 45 of them has not to obtain Ibama licensing yet to start their initial exploration plan. This the case of the French oil company Total.

The French company acquired in the 2013 11th Bid Round five blocks in the Foz do Amazonas basin - FZA-M-57, FZA-M-86, FZA-M-88, FZA-M-125 and FZA-M-127. 

At the same year of the acquisition, the French company formally requested Ibama environmental licensing for drilling up to nine wells. Four years later, the document has not been issued yet, although Total has already received the first equipment to be used in its exploration research, such as drill pipes, drill bits and containers. The equipment is stored in the Belém port, in the northern state of Pará.

Because of this licensing process endurance, ANP agreed to extend to 2020 the ending of the first exploratory period of Total's five blocks in Foz do Amazonas basin. Previously, the initial exploratory process was scheduled to be finished by 2018.

Total expects to start its oil drilling activities this year. The first wells will be drilled in ultra-deep waters at a depth of 1,900 meters off the northern state of Amapá’s coast in order to test deeper formations,” says the French operator in an official statement.

Brazilian independent operator Queiroz Galvao E&P is also facing the similar process as Total’s.  The company, which acquired Foz do Amazonas block FZA-M-90, is still waiting for the Ibama environmental licensing and expects to start its initial exploration plan in 2018.  


 

IBP president José Camargo

Those examples serve to show the importance of changing the current environmental licensing procedures in order to make them more efficient and faster, according to the Brazilian Institute of Petroleum, IBP. “The environmental licensing issuing process must be improved. Brazil’s government needs to establish legal safety with less subjective evaluation criteria and more predictability for licensing requirements,” says IBP president José Camargo.

For Brazil's government, the reasons rely on the fact that the Equatorial Margin is very close the Amazon Forest, one of the most diverse and delicate ecosystems in the world. Indeed, for decades local and world environmentalist groups such as WWF and Greenpeace, who claim fighting for its preservation, watch every move which is considered as a threat against the environment life of the giant rain forest.