Inspenet, December 18, 2023.
The decision to grant rights to exploit a block in the heart of the Amazon was announced by the Brazilian Government last Wednesday, one day after the approval of a transition to abandon fossil fuels at COP28 .
Oil concessions through auctions
This area in the Amazon sedimentary basin, located in the heart of the largest rainforest in the world, was the first to be auctioned in the Fourth Permanent Bidding Cycle of Concessions. The auction, which lasted all day Wednesday, aims to grant rights for the exploitation of oil and gas in 602 blocks distributed in 33 regions of Brazil .
The consortium that won the first block, the only participant in the auction, submitted an offer of approximately $33,000 for the exploitation rights of the area and committed to making investments of $240,000 in the concession. Eneva already has 12 concessions for the exploitation of hydrocarbons in various Amazon states, extracting 9 million m 3 of gas daily to power thermal generators with a production capacity of 6.3 GW of energy.
At the start of the auction, the general director of the National Petroleum Agency, Rodolfo Saboia, stated that there is no contradiction in the country continuing to grant rights for oil exploitation, despite the government’s commitment, reaffirmed at COP28, to accelerate the energy transition process. Atem, Eneva’s minority partner in the consortium, was the company that acquired the refinery that belonged to the state oil company Petrobras in Manaus, the main city in the Amazon.
The auction, held in a hotel in Rio de Janeiro, was preceded by a protest led by environmentalists, in particular Greenpeace, who expressed their discontent both with Brazil’s decision to continue auctioning oil concessions and for including areas in the Amazon, despite of the vulnerability of this ecosystem.
At the start of the auction, Rodolfo Saboia, general director of the National Petroleum Agency, stated that there is no contradiction in the country continuing to grant rights for oil exploitation, despite the government’s commitment, reaffirmed at COP28, to accelerate the energy transition process. He stressed that the transition will be gradual and costly, and that Brazil needs to continue oil production to finance the substitution of fossil fuels.
He also stated that, in view of a transition that could last several decades, it is crucial that Brazil hold new auctions of concessions to prevent its oil production from declining at the beginning of the next decade, which could lead the country to depend on the import of fossil fuels.
“It seems a contradiction but the energy transition will not be so fast. There are still costs to finance new infrastructure and technological challenges that will not be overcome in the next ten years. Without greater production we will once again be dependent on imports“, he claimed.
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