Brazil Awards Oil Concessions in the Pelotas Marine Basin

On Wednesday, the Brazilian National Petroleum Agency (ANP) awarded 44 areas in Pelotas, which is a basin in the Atlantic Ocean located off the southern state of Rio Grande do Sul.

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The companies benefiting from the award are Petrobras, Shell, Chevron, and China National Offshore Oil Corporation (CNOOC), which formed several consortia to exploit oil and gas in deep waters.

The Petrobras-Shell consortium secured 26 areas in four different regions. The Petrobras-Shell-CNOOC consortium obtained three areas, while Chevron was awarded 15 areas.

The winning consortia paid US$59.7 million for their licenses in the new exploratory frontier, situated in a maritime area bordering Uruguay.

Interest in Pelotas has revived following the discovery of vast reserves in deep waters off the coast of Namibia, in an area at the same latitude and with similar characteristics to Brazil.

The Namibian reserves, totaling up to 11 billion barrels, were discovered by Shell and Total. In today's auction, Chevron paid values for its licenses in Pelotas significantly higher than those demanded by the ANP.

Brazilian oil companies also decided to venture into exploration in the southern part of the country due to the challenges faced by Petrobras in obtaining environmental licenses in the Equatorial Margin, another new frontier off the coast of northern states.

The exploitation of this area, adjacent to regions where Suriname and Guyana have discovered massive reserves, has sparked controversy in Brazil as it includes a zone near the mouth of the Amazon River, with delicate coral reefs and vulnerable mangroves.

The Pelotas areas were the most contested in the Fourth Cycle of the Permanent Offering of Concessions, where the ANP auctioned rights to exploit oil and gas in 602 areas spread across 33 different Brazilian regions.

The auction on Wednesday was preceded by a Greenpeace-led demonstration. The environmental activists protested against Brazil's decision to continue auctioning oil concessions despite commitments made at COP28, which concluded with the approval of a transition to move away from fossil fuels.

At the start of the auction, ANP Director Rodolfo Saboia stated that there is no contradiction between offering concessions and Brazil's commitment to accelerate its energy transition process, which will be slow and costly. He said his country needs to continue producing oil to finance the energy shift.