Petrobras uses Guyana to pressure Brazil into granting permits

Brazilian state-owned oil company Petrobras appears to be using Guyana’s petroleum regulatory system to pressure Brazil’s regulators into granting environmental permits quickly. S&P Global, a global business analytics and information firm, said that Petrobras Chief Executive Officer, Roberto Castello Branco, pointed to Guyana as a likely business destination for the company.
Branco reportedly registered his unease that Brazil is taking too long to grant environmental permits to drill in Brazil’s Fox do Amazonas Basin.

“This has to be resolved,” Branco reportedly said during an address at the Rio Oil & Gas 2020 digital conference. “We have big oil prospects there, and we’re prohibited while Guyana is enjoying a moment and opening up,” he added.
S&P said that the area Petrobras is eager to drill in, could see similar success as ExxonMobil has found in Guyana’s Stabroek Block. There, Exxon has made 18 discoveries starting in 2015, and has received government approval for three field developments in a very short time.
“For now, we’re going to keep betting on Brazil,” Castello Branco said. “But it could be that we go there, too.”

The Petrobras CEO said that the company has been invited by Guyana to participate in its licensing rounds and that Brazil may very well do that if Brazil’s regulators continue to “drag their feet.”
Guyana’s government has made no public pronouncement about licensing new oil blocks. Further, Guyana is yet to revise its petroleum laws to provide for any new licensing regimes.
In any case, Guyana’s quick approvals of environmental permits for oil companies do not necessarily indicate that Guyana’s regulator has been doing its job.

Under the government of A Partnership for National Unity + Alliance for Change (APNU+AFC), the Environmental Protection Agency (EPA) granted a permit to ExxonMobil on the same day that it received the 1,500 page environmental impact assessment (EIA) for the Liza Phase One project.
International Lawyer, Melinda Janki, discovered this while compiling information for a case brought against the EPA in court by former head of the Transparency Institute Guyana Inc. (TIGI).
The regulatory body was sued for giving ExxonMobil a 20-year permit, when the law only allows for five-year permits to be issued. That lawsuit was successful.

This case demonstrates how the EPA has been quick to grant permits without conducting complete reviews, and with terms that are not necessarily in-keeping with the law.
Since the new government came in, the People’s Progressive Party Civic (PPP/C) has also been criticized for the manner in which it goes about conducting reviews. Janki and former Petroleum Advisor to the President, Dr. Jan Mangal, had both advised Guyana to take all the time it needs to review the Payara Field Development Plan (FDP) and EIA. Dr. Mangal had told this newspaper that proper reviews take much more than a few months, and would require competent specialized teams.

The PPP/C Government hired former Premier of Alberta, Canada, Alison Redford, to head the review team. Redford was forced to resign from politics after she mismanaged public funds while in office. The hiring of the former premier is further complicated by the fact that she benefitted from thousands of Canadian dollars donated to her party by an ExxonMobil subsidiary in Canada, called Imperial Oil. The matter raised questions about whether Redford held a conflict of interest in her review of Exxon’s US$9B Payara project. These concerns are further exacerbated by the fact that the final product of Redford’s review gave no finality to two of the controversial environmental infractions being committed by ExxonMobil in the Stabroek Block, the dumping of thousands of barrels of produced water every day, and the flaring of more than 12 billion cubic feet of natural gas to date.
The PPP/C government considered Redford a fit and proper individual to review the project, and the permits were handed out just six weeks after she began her review.