Fossil-fuel extraction in the Northern Region could turn a 20th-century oil company into a 21st-century energy company
It caused an uproar in the public debate the Brazilian Institute for the Environment and Renewable Natural Resources (IBAMA) having denied the license for the Petrobras look for Petrolium on the so-called “Equatorial Margin”, a strip of sea that extends from Rio Grande do Norte to Amapá, about 500 kilometers from the mouth of the Amazon River.
There are relevant issues. The area is environmentally sensitive. And there will be increasing restrictions on fossil fuels, which should bring some of its price down over the next few decades.
To get an idea of the potential economic impacts, it’s worth looking at the coast of neighboring Guyana, which discovered reserves in 2015.
In 2022, oil extraction reached 360,000 bpd, and Guyana is expected to become South America’s second largest producer, with 1.7 million bpd in 2035, behind only Brazil, according to Rystad Energy. The breakeven price per barrel of production in Guyana is US$28 to US$30, competitive worldwide.
Reserves on the Brazilian side are expected to be large and cost resilient to demand reductions. Preliminary estimates indicate wealth ranging from $770 billion to $2.3 trillion.
Exploration of the Equatorial Rim should be able, from 2030 onwards, when pre-sal deposits are expected to start declining, to increase Brazilian production, generating revenues with a low risk of making investments unattainable.
The revenues from Petrobras’ current business are decisive for the country to face the challenges of climate transition Right. And oil from the Equatorial Rim has an emissions intensity up to 30% lower than the global average, something welcome in a decade of transition.
The assessment of all environmental impacts must be rigorous. The independence of environmental agencies and the excellence of Petrobras, with more than a thousand wells drilled in ultra-deep water, must work together.
Petrobras has yet to show in its planning how it will use oil revenues to transform the 20th century oil company into the 21st century energy company, and how this future articulates with the development of supply chains from which the country takes advantage of its natural advantages (wind, light, soil, etc.) to promote a competitive industry.
OR National Bank for Economic and Social Development (BNDES) can cooperate. A working group is being created with Petrobras to, among other things, promote activities for the benefit of people in the region and evaluate the creation of funds to develop supply chains.
Oil exploration on the Equatorial Rim can stop being a problem for those who care about the environment and become a bridge to a just energy transition. / LUCIANA COSTA IS A DIRECTOR OF BNDES
Source: Terra
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