Petrobras gets green light to drill oil exploration wells in “promising” region offshore Brazil

(Bloomberg) – Petroleo Brasileiro SA received a permit to research oil in a promising offshore region in Brazil’s Northeast as the energy giant seeks to open up new basins to expand production.

Brazil’s top environmental agency, Ibama, granted Petrobras the environmental license to research the Potiguar basin, one of five regions in the Equatorial Margin, according to Mines and Energy Minister Alexandre Silveira, following months of stalemate between the state-controlled oil company and the regulator.

Petrobras will begin drilling in the area next month after a rig arrives at the location, the company said via email. The plan is to survey the area to assess the economic viability and extent of the oil discovery made in 2013 at the Pitu well. There’s no oil production at this stage.

The state-controlled oil giant expects to get an official notice from Ibama on Monday to drill two exploratory wells in the maritime block BM-POT-17, in deep waters of the Potiguar basin. The first one will be drilled 52 km (32 miles) off the coast.

Petrobras sees the Equatorial Margin as one of the last promising oil exploration opportunities in Brazil. The firm is betting the region may hold reserves similar to the multibillion-barrel discoveries that Exxon Mobil Corp. is developing to the north in Guyana.

Earlier this year, Ibama blocked the company’s plans to begin drilling block FZA-M-59 in the potentially oil-rich region in the Foz do Amazonas basin out of social and environmental concerns. Petrobras then decided to apply for a license to drill in the Potiguar basin as an alternative, while it awaits the authority’s analysis of an appeal.

After the approval to research the Potiguar basin, technicians will be able to make progress in studies of the necessary conditions to research on Foz do Amazonas basin, said Silveira. Petrobras studies signal that block FZA-M-59 alone may have a potential of 5.6 billion barrels of oil according to him.

While Brazil seeks to increase oil production at home, the government has also pushed a climate agenda globally. The country’s output is set to reach a record this year and the initiative to survey the area has led to protests from environmental activists and tensions among President Luiz Inacio Lula da Silva’s allies.

Once the exploration potential is confirmed, “there will be more social and economic development in the region and more resources to finance health and education,” said Silveira.

“Brazil’s new frontiers are essential for guaranteeing national energy security and sovereignty, in a context of energy transition and a low-carbon economy,” Petrobras added.

Ibama didn’t immediately reply to a request for comment.