The Brazilian Institute of Environment and Renewable Natural Resources (“IBAMA”) is the governmental agency entrusted with the preservation of Brazil’s diverse ecosystems. Under the purview of the globally revered environmentalist Marina Silva, Minister of the Environment and Climate Change of Brazil, IBAMA attempts to strike a balance between environmental protection and the economic contribution from country’s extractive industry. Most recently, that balance has shifted towards environmental protection as the regulator clamps down on exploration in or near the Amazon.
On 17 May 2023 IBAMA, rejected Petrobras’ request to drill a well on the Foz do Amazonas basin at the mouth of the Amazon River, 170 kilometres off the coast of Amapá. IBAMA’s technical experts ruled against the proposal, arguing of potential environmental harms and threats to the conservation of indigenous lands in the region.
The director of a major Brazilian NGO was delighted by the ruling, “We are very happy with IBAMA’s decision. But let me emphasise, this is not only a success from an environmental point of view but also a success of the rule of law in Brazil. Bear in mind that Petrobras, with all its money and the power and the support of the government, has a tradition of imposing its projects and twisting the arm on regulatory bodies when needed. This time, IBAMA was clear about the environmental perils that this project could cause, and the ministry of energy stood firm with the ruling which was based on a technical assessment.”
“…this is not only a success from an environmental point of view but also a success of the rule of law in Brazil.”
The director of a major Brazilian NGO
Petrobras insists its proposal adheres to all technical requirements and will launch an appeal but Marina Silva remains resolute in her opposition of the proposal, even in the face of significant opposition from government allies in Congress.
This conflict leaves Brazil’s President Luiz Inácio Lula da Silva in an uncomfortable position. Traditionally perceived as a president who honours past contracts and favours Petrobras’s role in the development of the oil industry, he is now stuck in the middle of congressional fight insisting that 28 million people living in the Amazon have the right to explore their own natural resources. For their part, the left-wing led government of Amapá supports the project, seeing it as the goose that lays the golden eggs for its economic future. Randolfe Rodrigues, chief whip of the government in Congress, supports Lula’s view and has said that the government will meet with all public bodies to address IBAMA’s environmental concerns and, eventually, secure Petrobras’s project off the coast of Amapá.
The NGO director commented, “IBAMA’s ruling is tied to Lula’s political capital. He championed the environment in his electoral campaign to win votes. He has clashed with Marina Silva in the past so her appointment to his cabinet was seen as a firm commitment to his environmental pledges. The difficulty for Lula is that his position in Congress is weak and to pass his key policies he will need to make some sacrifices and the environment may be one of those. Unfortunately, Lula’s environmental agenda is more a consequence of his political calculations and not of his convictions. He knows that some environmentally damaging infrastructure projects such the exploitation of potassium mines in the Amazon, the incentives to purchase cars for the poor or the Ferrogrão railway (grain rail) will grant him votes in these regions. Whether all this will happen and at what political cost, it is difficult to tell at this point.”
“Unfortunately, Lula’s environmental agenda is more a consequence of his political calculations and not of his convictions.”
The director of a major Brazilian NGO
While environmental NGOs celebrate this outcome and many investors watch closely, Petrobras recently announced that “it will exercise its right to file a Request for Reconsideration with the Presidency of IBAMA” to reconsider the decision to deny the environmental license. For Petrobas it’s not over until it’s over!