OIAPOQUE, Brazil, May 12 - Deep beneath the waters of the
Atlantic off Brazil's most northern coast, French major Total SA
is hunting for what it hopes will be Latin America's
next big oil discovery.
Metal drill bits, pipes and containers filled with equipment
sit in the tropical port of Belém, near the mouth of the vast
Amazon River, ready to sink the first exploratory wells 120 km
(75 miles) offshore.
Some geologists say the area, known as the Foz do Amazonas
Basin, may contain as many as 14 billion barrels of petroleum,
more than the entire proven reserves of Mexico.
But another underwater discovery threatens to derail Total's
plans: a massive system of coral reefs just 28 kilometers from
where the French firm and its partners, Britain's BP PLC
and Brazilian state oil company Petroleo Brasileiro SA,
plan to drill.
Brazilian scientists had suspected since the 1970s that the
area might be home to a sizeable reef. But the unusual depth of
this formation - reaching more than 100 meters (400 ft) -
coupled with the Amazon silt clouding the waters, delayed that
confirmation until just five years ago, just as the government
was putting drilling leases out for tender.
Environmentalists, led by campaigner Greenpeace, are now
pressuring regulators to block oil exploration in the area. They
believe the thriving reef system, which is more 1,000 kilometers
long and dotted with brightly colored coral and giant sponges,
may be home to new marine species.
Scientists fear an oil spill could damage this treasure
before it has even been studied. Leaked crude from Foz do
Amazonas wells could also potentially wreak havoc on Brazil's
far north Amapá state, home to the world's largest belt of
mangroves and thousands of square miles of virgin rainforest,
says environmental scientist Valdenira Ferreira.
"In terms of environmentally sensitive environments, this is
the biggest in Brazil," said Ferreira, a researcher at the
Institute for Scientific Research of Amapá, who is helping
prepare a study for the nation's Environment Ministry.
Total says it is scrupulously complying with all
requirements by Brazilian authorities and is taking every
precaution to ensure that drilling would be safe.
The dispute highlights pressures facing Brazil to protect
its unique environmental patrimony as its tries to foment jobs
and economic growth for its citizens.
It is also reviving concerns that Brazil, which ranks among
the Western hemisphere's least open economies, remains a
difficult place to do business despite a new conservative
government's efforts to cut red tape and woo foreign investment
as it seeks to drag the economy out of the worst downturn since
the Great Depression.
Four years after Total and its partners paid 622 million
reais ($196 million) for five exploration blocks, they are still
waiting for the go-ahead from Brazil's environmental regulator,
The agency has given no indication as to when it will make a
"It's an area that is very sensitive. We're concerned about
everything there," said Alexandre Souza, environmental analyst
The delay has Total's Chief Executive in Brazil, Maxime
Rabilloud, suggesting the company might sit out three offshore
oil license rounds that Brazil has scheduled for this year.
He said Total had already invested some 200 million reais
($64 million) in developing its fields in Foz do Amazonas, with
no guarantee yet that it will be able to proceed.
"It's complicated to ask for more money to enter into more
exploration blocks without clarity about when the earlier blocks
can be evaluated to see if they have any oil," he said in his
office in Rio de Janeiro in March.
Such uncertainty could prove damaging for Brazil in a year
when oil companies have 25 auctions to choose from around the
world, says Antonio Guimaraes, executive secretary of
exploration and production at the Brazilian Petroleum Institute
(IBP), an industry group.
He has urged President Michel Temer's government to speed
passage of legislation currently pending in Congress that would
make it easier for companies to win environmental licenses, an
effort that has alarmed environmentalists.
Deep-water discoveries during the 2000s off the coast of Rio
de Janeiro in an area known as the pre-salt made Brazil one of
the oil sector's hottest destinations, prompting then-president
Luiz Inacio Lula da Silva to declare "God is Brazilian".
The announcement of the massive Libra offshore prospect in
2010 – the world’s biggest in decades - heightened the
excitement around the area.
Today, the pre-salt region accounts for almost half of
Brazil's oil production, and is rising fast. Success there has
piqued interest in other offshore regions of Brazil, including
Foz de Amazonas.
The basin was the most hotly disputed area of Brazil's 2013
oil auction. In addition to Total and BP, Brazil's OGX
and Queiroz Galvão Exploration and Production (QGEP)
secured blocks in the area.
Helping fuel optimism was a May 2015 offshore discovery by
ExxonMobil in nearby Guyana in an area with similar
"I would say in terms of the opening of a new frontier in
Brazil, the Amazon Basin is a strong candidate," said geologist
Pedro Zalan, who did exploration work for Petrobras in the area.
Total, which said it hopes to receive a decision from Ibama
this year, plans to drill nine exploratory wells at water depths
of more than 1,900 meters.
Environmentalists say such extreme depths bring greater
risks, making it harder to plug and contain any spill. BP's 2010
Deepwater Horizon oil spill, the worst in U.S. waters, was from
a deep-water well of similar depth.
In a 64-page document submitted to Ibama, reviewed by
Reuters, Total said the environmental risks were fully
"We are very aware of the sensitivity of the ecosystems,"
Rabilloud said. He said the company was using a well design that
has been used in similar conditions in French Guiana without any
In the event of an accident, Rabilloud said an emergency
response could be activated within two hours.
In contrast to findings by Ferreira, the environmental
researcher in Amapá, Total has concluded that ocean currents
would carry any pollution away from the coast of Brazil.
Rabilloud expressed confidence in receiving a green light
from Ibama but said the uncertainty over the delay made
"Right now, Total is ready to invest," he said. "Now, if you
ask me when I will get the license, I can't tell you."
FISHING AND UNEMPLOYMENT
President Temer's government has proposed plans to simplify
environmental licensing and hand companies a greater say in a
bid to avoid lengthy delays.
The Ibama environmental agency has also seen its budget
slashed as the government scrambles to curb a massive deficit.
Packed with members of the farming and business lobby, the
government has been accused of downplaying environmental damage,
including rising levels of deforestation.
The government denies neglecting environmental rules or
planning to dilute them. It says, however, its top priority is
creating jobs and bringing an end to Brazil's harshest recession
In Amapá, the Brazilian state with the highest rate of
unemployment last year, many residents are eager for potential
benefits from the oil industry.
However, in the remote town of Oiapoque near the border of
French Guiana, many suspect that will pass them by.
Fishermen in the poor town fear the oil industry may instead
hurt their livelihoods.
"If we have an oil spill here, the fish will die and what
will the fisherman do," said Rodolfo Antonio Ferreira da Silva,
63, who has fished for nearly 50 years, casting his net into the
For Adair Jeanjaque, a member of the Kalina indigenous
people, the oil venture smacks of colonialism.
"It will be the same as when the Portuguese came here and
took everything without any benefit," Jeanjaque said in his
village on the outskirts of Oiapoque.
($1 = 1.7910 marka)
($1 = 3.1740 reais)
($1 = 3.1497 reais)
(Writing by Stephen Eisenhammer and Daniel Flynn; Editing by