Brazil holds oil auction just as climate summit comes to an end

The Brazilian government auctioned off more than 602 lots for oil and gas exploitation on Wednesday. The move was made just after the United Nations COP28 climate summit reached a historic agreement to transition away from fossil fuels. As applause for the deal — signed in Dubai by Brazil and 199 more countries — continued to sound, the state-owned oil company Petrobras was auctioning off the rights to explore gas across the country, including inland areas in the Amazon, the waters of the island of Fernando de Noronha and along the southern coast. Brazilian environmentalists went to court in an attempt to stop the auction, and have also been loudly condemning the Brazilian government — led by President Luis Inácio Lula da Silva — for wanting to be an environmental leader while boosting the production of the fuels that cause global warming.

The auction ended with a third of the blocks awarded to 19 companies that have committed to investing more than 2,000 million reais ($400 million), according to the Brazilian newspaper O Globo.

The text agreed to by the countries at the COP28 makes a direct mention for the first time of the main culprits of the climate crisis: oil, coal and gas. Some environmentalists argue that continuing to search for oil and gas reserves goes against the urgent action required to combat climate change. “Climate science is clear: we can no longer open new areas for the exploitation of fossil fuels,” said Brazilian Délcio Rodrigues, director of the ClimaInfo Institute. Another Brazilian NGO, the Arayara International Institute, filed several lawsuits in court in a last-minute attempt to get judges to stop the auction.

Lula’s own government welcomed the agreement reached at the climate summit, which was held in a petrostate. Brazil’s Minister of Environment and Climate Change, Marina Silva celebrated the fact that, after 31 years of debates, the summit agreed on “a trajectory to leave fossil fuels behind.” Silva — who was Environment Minister two decades ago under Lula’s previous administration — told the U.N. summit that Brazil was committed to the climate goals, but that wealthy nations must “take the lead in the transition away from fossil fuels.”

Brazilian environmentalists dubbed Petrobras’ controversial public offering as “the auction of the end of the world” due to the number of blocks up for bid and because dozens of them are located in environmentally sensitive areas, according to NGO reports. The auction, however, did not include the equatorial area in the waters off the Amazon, which is considered a new oil frontier. This area is also the front line of NGOs battle against crude oil in Brazil.

Brazil finds itself in an awkward position at a time when it is campaigning internationally to be one of the countries leading the energy transition and wants to raise funds to protect the Amazon. Both Norway and the United Kingdom took advantage of the COP to announce donations to the Amazon Fund totaling $95 million. This fund recognizes results obtained in Brazil to reduce deforestation.

It’s been confirmed that COP30 will be held in the Amazon, in the city of Belém, in 2025. This is the first time the climate summit has taken place in the Amazon. It’s a symbolic decision, and a political win for Lula, who met the leaders of Amazon countries in the city last August. At that meeting, Colombian President Gustavo Petro proposed that the nine countries commit to renouncing the exploitation of fossil fuels. But it failed to win support.

On the one hand, Brazil is home to most of the Amazon Rainforest, which is crucial to mitigating global warming, and on the other hand, it is the ninth-largest producer of crude oil in the world. Lula — a skilled politician — is trying to promote environmental protection — one of his government’s priorities — without affecting Petrobras, a company that is key to the country’s economic performance, job creation and tax revenue.

The auction, organized months ago, was held shortly after another controversial decision was made public. As Lula took part in COP28 in Dubai, it was announced that Brazil will join the powerful OPEC+ group of oil producing countries in January, as an observer.

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