Total-ly unclear

Total exits exploration blocks in Brazil but is it a victory for environmentalists?

This week, Total announced it was withdrawing from 5 exploration blocks in the Foz do Amazonas Basin in Brazil. Some parts of the international press latched onto this as a victory for the environment and another step towards the end of oil and gas. Not quite, let’s look closer.

A Greenpeace executive in Brazil explains, “Total’s resignation is not what it seems. The company will not give up its oil exploration ambitions in Foz do Amazonas. On the contrary, the company is calling for the Federal Government to dismantle IBAMA [Brazilian Institute of Environmental and Renewable Resources] to find a way around current regulations.”

The same source explains further, “Total is currently responsible for obtaining the environmental licence (from IBAMA), but it was denied in December 2018. Furthermore, IBAMA has rejected five Environmental Impact Tests submitted by Total [for the Foz do Amazonas basin].” IBAMA has argued that technical problems present environmental risks and emphasised the lack of guarantees offered by Total in the event of an accident.

“We [the ANP] are not currently contemplating the possibility of Total returning the concession.”

Senior technical advisor to ANP, Brazil.

A senior technical advisor to Brazil’s National Agency of Petroleum, Natural Gas and Biofuels (ANP) also felt it was unlikely that Total will exit, “Although Total has resigned these blocks, it is unlikely to leave the consortium, it could keep its stake and transfer operating tasks to other partners in the consortium, BP or Petrobras.” Total holds a 40% stake in the consortium with BP and Petrobras holding 30% each.

The ANP advisor continues, “At this point, we have not received any official notification from Total, which remains the operator of the blocks until it formally notifies us whether it is returning the concession to the ANP or passing it over to one of its partners. We are not currently contemplating the possibility of Total returning the concession. The five blocks are part of a framework which we expect the concessionary to fulfil.”

“Total’s resignation is not what it seems. The company will not give up in its oil exploration ambitions in Foz do Amazonas.”

Executive at Greenpeace, Brazil.

A local senator we spoke to was furious at the situation and the government’s attitude towards the sector, “There is no clarity on why Total decided to resign from these five blocks and the government has no clear policy for ANP. As such, we are exposed to the whims of big oil companies that want to invest in the country with no guarantees or long-term commitments.”

Why have Total resigned the blocks? Will one of the consortium partners take over? Will the concession be returned to the ANP? What are the wider implications for the Foz do Amazonas basin?

Get in touch for a deeper dive or if you’d like us to monitor the situation as it evolves.

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