Brazil moves toward allowing Petrobras to begin Foz do Amazonas oil drilling

(Bloomberg) – President Luiz Inacio Lula da Silva’s government is moving toward allowing Brazil’s state-run oil company to survey an ecologically sensitive offshore region.

The attorney general’s office, or AGU, will issue an opinion that it is not necessary for Petroleo Brasileiro SA to conduct a major environmental impact study to begin prospecting oil in the so-called Foz do Amazonas, a region off the country’s northern coast, according to two people with knowledge of the matter.

The attorney general, who represents the interests of the whole government in judicial matters, will issue a technical opinion that considers a recent Supreme Court ruling in a similar case, said one of the people. Both requested anonymity because they were not authorized to speak publicly.

Answering a request for comment, AGU said in a statement it is “carrying out a legal analysis on the case” and will publish a formal response in the next few days.

Brazil’s top environmental agency, Ibama, earlier this year blocked the company’s plans to begin exploratory offshore drilling in the potentially oil-rich region in the Equatorial Margin — an area that is home to a 3,600-square-mile (9,500-square-kilometer) coral reef. Ibama didn’t immediately reply to a request for comment.

The stalemate between regulators and Petrobras, as the oil giant is known, has led to months of simmering tensions inside the Lula government. The 77-year-old president has tried to strike a balance between economic development and the ambitious green agenda outlined by Environment Minister Marina Silva, who oversees Ibama.

Pressed to take sides in the dispute between Petrobras and Ibama, Lula has said he favors research to determine whether oil is present in the region and insists that any exploration would be carried out safely to avoid environmental problems.

This week, he said the issue was still “under discussion” inside his government.

The Brazilian government’s commitments to a carbon-free future are far from clear. Petrobras said late Tuesday that the company’ top brass met with Bolivian President Luis Arce in Belem to discuss areas of cooperation in the exploration and production of natural gas.

Petrobras sees the Equatorial Margin as Brazil’s last promising exploration opportunity. The area is geologically similar to Guyana, where Exxon Mobil Corp. has recently made multibillion-barrel oil discoveries.

When asked about the future of the Foz de Amazonas on Wednesday, Silva said projects were approved or denied on a technical basis and Ibama would not intervene.

“We don’t make it easy, and we don’t make it difficult,” she said.