December 6, 2017, by Jan Rocha
BP says it has learned a lot from its Gulf of Mexico experience. Image: Via Wikimedia Commons
British companies targeting Brazilian oil deposits stand to benefit from massive tax relief offered by Brazil itself, despite its own recession.
SÃO PAULO, 6 December, 2017 – Over 120 NGOs and indigenous organisations have protested at a US$300 billion tax relief offer to help UK companies seeking to drill for Brazilian oil in offshore deposits.
In a letter to the speaker of the lower house of the Brazilian parliament just before it approved the first stage of the proposal, they said the drilling would “expose the world to unacceptable climate risks” and cause unacceptable costs to the Brazilian economy, which is already facing crisis and imposing austerity cuts in basic services.
The companies plan to drill in what is called the pre-salt region, an oil-bearing rock formation in deep water offshore.
Its name derives from its antiquity; the region’s layers of rock were laid down about 160 million years ago and then covered by later layers which do contain salt. The Brazilian energy multi-national Petrobras describes the pre-salt product as “excellent quality, high commercial value light oil”.
The bill before parliament offers the oil companies tax relief until 2040. After heated debate, it was passed late at night, by 208 votes to 184. It is being rushed through congress at the very end of the parliamentary year; a vote on the final stage is due on 6 December.
If approved, the bill would wreck Brazil’s Paris Agreement targets to reduce carbon emissions. The known reserves of pre-salt oil are estimated at 176 billion barrels, which, if burned, would release 74.8 billion tonnes of CO2 into the atmosphere.
“This is equivalent to almost 18% of everything humanity can still release into the air to meet the most ambitious Paris target of stabilising warming at 1.5°C”, the NGOs write.
They point out that a temperature rise of more than 1.5°C will have dramatic consequences, not only for island nations which will be swamped by rising sea levels, but also for the drought-prone Brazilian north-east and for coastal cities like Rio de Janeiro.
British oil companies will be the main beneficiaries of this largesse with Brazilian taxpayers’ money – BP, Shell and Premier Oil, which successfully bid for licences to drill in the pre-salt area.
“This is equivalent to almost 18% of everything humanity can still release into the air to meet the most ambitious Paris target of stabilising warming at 1.5°C”
Greenpeace says it has discovered information showing that the UK government actively lobbied on the companies’ behalf during a visit to Brazil by the British international trade minister Greg Hands in March, ostensibly to open a UK trade fair.
After meeting the oil companies, it says, Hands put their concerns to Paulo Pedrosa, Brazil’s deputy minister for mining and energy.
Soon after, Shell and a consortium including BP were given three oil licences, and the Brazilian government decided to reduce its “local content requirements” – regulations that oblige companies to hire local workers and use local goods, to try to boost the economy of developing countries and regions.
Opposition congressman Carlos Zarattini said that, under pressure from the UK, the government of President Michel Temer had altered tax rules, environmental safeguards and the requirement for Brazilian content in equipment and labour. Zeroing taxes on the import of vessels, he said, could cause the collapse of Brazilian shipyards.
The NGOs suspect the Brazilian government’s intention is to exploit the country’s oil reserves as much as possible before the world moves inexorably to a low carbon economy.
With the growing movement in favour of leaving-it-in-the-ground, they calculate there could be fierce competition by oil-rich nations to sell off their reserves. By offering generous incentives to exploit the deep sea pre-salt reserves, Brazil hopes to get ahead of the game.
And it is not only the pre-salt area which interests the oil companies. BP is also bidding to drill in the mouth of the Amazon, even after alerts that the blocks on offer are very near a coral reef and in a region with many species threatened by extinction, and with possibly several new species as well.
At recent public meetings in towns near the proposed exploration, a BP spokesman insisted the company had learned a lot from its experience in the Gulf of Mexico.
Greenpeace oil specialist Thiago Almeida, who was present at the meetings, suggested that in view of the scant knowledge available on the region, the precautionary principle should be applied, and BP should abandon its plans and stay away from the Amazon estuary. – Climate News Network
Jan Rocha is a freelance journalist living in Brazil and is a former correspondent there for the BBC World Service and The Guardian.