Brazilian state-held oil firm Petrobras is considering growing its oil reserves and production with projects abroad after a major drilling project at home was denied due to environmental concerns, Reuters reported on Thursday, quoting sources familiar with the company's plans.
Petrobras, which hasn't made a large domestic discovery in more than a decade, could decide on a U-turn in its exploration policy and look to grow outside Brazil instead of focusing domestically and shrinking its foreign presence as it has done over the past decade.
The reason for the possible U-turn in exploration and production strategy is the recent rejection of a drilling project in the Foz do Amazonas area in the so-called Equatorial Margin where the Amazon River meets the Atlantic.
Petrobras has bet big on the Equatorial Margin to replenish its reserves.
But last month, Brazil's environmental protection agency refused to grant approval for the controversial offshore oil project led by Petrobras.
The agency based its decision, which was celebrated by environmentalists, on "a function of a group of technical inconsistencies."
The block in the Foz do Amazonas basin, off Brazil's northern coast, is close to the mouth of the Amazon River, which prompted the environmentalist protest that eventually led to the regulator's decision.
Petrobras already operates several blocks in the area, which, according to Brazil's oil and gas regulator, has a similar geology to the Guyana-Suriname Basin, where several massive discoveries have been made.
Petrobras is appealing the decision of the environmental protection agency Ibama. But the state oil giant wasn't prepared for such a rejection, according to Reuters' sources.
Drilling in the Equatorial Margin has been Petrobras' "Plan A, B, and C" for replenishing its oil reserves, one of the sources noted. Without the Equatorial Margin, Petrobras may have to seek growth opportunities outside Brazil, according to the sources.
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews. More