Brazil’s state oil company, Petrobras (PETR3. RA), was denied a much sought-after license to drill in the environmentally sensitive Foz do Amazonas basin on a regulatory order.
Petrobras passed the general environmental review, but failed one of the requirements tied to animal-rescue procedures, according to a review released to the public by the country’s environmental agency, Ibama, on Wednesday.
Ibama’s technical report stated that the plan proposed by the company “is not capable of ensuring proper actions for the care of animals”.
This decision has obliged Petrobras to amend its emergency response plan, which must be done for the state-owned company to continue with the application, since over 30 years ago, to drill in the Amazonian offshore region.
Ibama said in a statement to Reuters that Petrobras needs to submit the new plan, but that it would not have to do a new simulation before the license is approved.
Petrobras answered that it plans to submit the revised emergency response plan again on Friday. The agency issued a new simulation that would be necessary when this drilling was done, which, according to the company, is a civil-licensing routine.
Strategic significance of the Foz do Amazonas basin
The Foz do Amazonas basin off Brazil’s Amazonian state of Amapa is Petrobras’s top prospecting frontier for oil. The region has geological similarities with Guyana, where Exxon Mobil (XOM.S) is working on large oil projects. Analysts are calling the basin a significant long-term production pillar for Petrobras.
A senior Petrobras executive told Reuters, speaking on condition of anonymity, that while the license was subject to regulatory approval, the license would “inevitably” be granted.
The firm sounds high that handling the animal-rescue agenda may get drilling chores moved ahead within a reasonable time.
Simulated rescue exposed operational risks
Ibama’s evaluation referred to the process of a rescue exercise for animals carried out by Petrobras. The company substituted real animals with toys in the simulation, adding that the animals had to be transported to a veterinary centre within 24 hours. The incidents unfolded in three different events while doing this exercise.
For example, a Petrobras ship got caught in a fishing net. One boat grounded on a sandbank, and there was also a near-miss with another vessel. They highlighted some operational risks that might manifest in a real-world crisis.
The report also highlighted problems with the safety of personnel. Those aircraft pilots participating in the simulation were apparently not provided with appropriate protective clothing to keep them from being exposed to toxic vapours from oiled animals. Ibama’s assessment suggests these deficiencies must be solved before the ‘real world work’ begins.
Next steps for Petrobras
The organisation has committed to fixing the issues noted by Ibama and anticipates submitting the revised emergency response plan soon.
While no more simulation is required before the license is given, Petrobras will need to undertake a fresh exercise once drilling begins. This evaluation and testing procedure is consistent with typical practices in Brazil’s environmental licensing structure.
The case emphasises the difficulties of reconciling oil production with environmental protection in one of the world’s most environmentally fragile areas.
Regulators, stakeholders, and environmentalists will be keenly watching Petrobras’ capacity to deploy effective rescue and safety procedures.
The Foz do Amazonas basin remains a high-priority project for Petrobras, with enormous strategic value. However, the most recent Ibama evaluation shows that even technically competent energy corporations must overcome difficult environmental restrictions to operate in Brazil’s offshore areas.
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