Brazilian oil industry gets support from new congressional caucus

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BRASILIA – Brazilian lawmakers have set up a congressional caucus to represent Brazil’s oil and gas industry, led by state-run producer Petrobras, and to back the company’s plans to explore offshore fields near the mouth of the Amazon River.

“Petrobras has to do that. We have to explore for oil off-shore from Para to Amapa states, like Guyana and Venezuela are doing,” the leader of the caucus, retired army general Eduardo Pazuello, said in an interview late on Wednesday.

Petrobras has planned to explore in the so-called Northern Brazilian Equatorial Margin, following major discoveries in neighboring Guyana and Suriname. But Brazil’s environmental protection agency has denied the company a license and asked for more studies on the risks of drilling there.

President Luiz Inacio Lula da Silva’s cabinet is divided over drilling in the region. The Mines and Energy Ministry favors drilling, but environmental officials have blocked it.

“The government is split, but it will do it. We have to explore for oil at the mouth of the Amazon,” Pazuello said.

Environmental groups have called on the government to block exploration near the mouth of the Amazon, arguing that it will damage a vulnerable and little-studied area where South America’s biggest river flows into the Atlantic ocean.

Neighboring states want exploration to proceed because it will bring investment and jobs.

The Parliamentary Front in Support of Oil, Gas and Energy, as the caucus is called, was launched on Tuesday with 217 members, or 42% of the lower chamber of Congress.

Pazuello said the caucus will work in the interests of energy producers and distributors, along with hundreds of oil and gas equipment and service providers, including foreign firms such as Norway’s Equinor, the second-biggest operator in Brazil after Petrobras.

He said the launch of the caucus received unprecedented support in Congress and was a non-partisan effort. Its deputy leader is Washington Quaquá, of President Lula’s Workers Party.

The caucus will seek to mobilize political support in Congress to press the government to explore near the mouth of the Amazon and pass legislation to expand energy infrastructure in Brazil.

Pazuello said Brazil is a world leader in renewable energy sources, with 85% of its electricity provided by hydroelectric, wind, solar or nuclear generators, but the transition to cleaner energy will continue to require oil and even coal for some time.

Pazuello, who was health minister for former far-right President Jair Bolsonaro during the pandemic, was elected to Congress in 2022 from Rio de Janeiro, the state where much of Brazil’s oil industry is based. REUTERS

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