The Brazilian president Michel Temer has abolished an Amazonian reserve the size of Denmark, prompting concerns of an influx of mineral companies, road-builders and workers into the species-rich forest.

The dissolution of the Renca reserve – which spans 46,000 sq km on the border of the Amapa and Para states – was described by one opposition senator Randolfe Rodrigues of the Sustainability Network party, as the “biggest attack on the Amazon of the last 50 years”.

Published in Economy

Total’s plans to drill near Brazil’s newly discovered Amazon Reef have suffered a setback after the federal prosecutor of the state of Amapá has recommended the suspension of environmental licensing for their planned deepwater drilling project. But what are the economic and environmental elements in play in this multi-faceted drama as Total and its partners await the verdict?
The discovery in 2007 of massive oil reserves in the offshore area now known as the Subsalt Polygon has provoked considerable excitement about the growth potential of Brazil’s offshore oil and gas market. A particular focus for enthusiasm is the country’s deepwater and ultra-deepwater resources, which have been consistently boosting production (despite lowered expectations in the wake of depressed global oil prices) as a result of accessing pre-salt hydrocarbons at extreme depths.

Brazil and the US now account for more than 90% of global ultra-deepwater production, with Brazil leading the world in the development of these resources, increasing ultra-deepwater production from 1.3m b/d in 2005 to 2.2m b/d in 2015. According to a 2015 study by Rio de Janeiro State University’s National Institute of Oil and Gas, the Subsalt Polygon contains at least 176bn BOE of undiscovered, recoverable oil and natural gas, and this, the researchers said, is a conservative estimate.

The Subsalt Polygon has been such a success for the oil and gas industry that offshore Angola, one of the only other major deepwater markets, is being heavily targeted for exploration because of its geologic similarity with the Brazilian coast.

Foz do Amazonas: impressive hydrocarbon potential
Further north up the Brazilian coast from the Subsalt Polygon district, another offshore area has prompted high hopes from the oil and gas industry over the last few years. The Foz do Amazonas Basin, off the coast from the mouth of the mighty Amazon River in Brazil’s Amapá state, could contain up to 14bn barrels of oil, according to government estimates. Not quite the industry-changing bonanza that the Subsalt Polygon represents, but still more than the entire proven reserves of Mexico, and an attractive opportunity for companies – both Brazilian and foreign – to develop a new offshore frontier.

The basin was the hot-ticket item during Brazil’s 11th oil and gas bidding round back in 2013. Oil major Total, along with minority partners BP and Brazilian national oil company Petrobras, paid around $190m for the rights to five exploration blocks in the Foz do Amazonas region, with Total owning a 40% operating stake and BP and Petrobras each owning a 30% share of the blocks. Other companies to win blocks included BP (which snapped up one block for itself), BHP Billiton and Brazilian firms OGX and Queiroz Galvão Exploration and Production.

On top of the region’s promising estimated reserves, Foz do Amazonas has been made even more enticing by the significant successes of ExxonMobil off the coast of neighbouring French Guiana, exploring highly comparable geology. The company announced a major oil discovery in the Liza field in May 2015, and just over a year later stated that the discovery alone would likely yield up to 1.4bn barrels, valued at around $70bn last year and double the size of Exxon’s initial estimates.

A potential offshore frontier at a crossroads
However, even as Total and its partners ramped up to begin exploratory drilling in its Foz do Amazonas blocks, having identified nine potential sites for initial works and waiting only for environmental approval from Brazil’s Institute of Environment and Renewable Natural Resources (IBAMA), another fascinating discovery has thrown everything into doubt.

Last year, an international team of scientists announced a discovery that confirmed what some have suspected since the 1970s – a 1,000km-long coral reef system around the mouth of the Amazon, rich with marine life and flourishing despite long periods without sunlight due to extensive sediment coverage from the river. The scientists believe the coral has grown by using chemosynthesis – producing energy and organic matter using CO2, water and inorganic substances, with no light required – rather than photosynthesis.

“We found a reef where the textbooks said there shouldn’t be one,” Federal University of Rio de Janeiro researcher Fabiano Thompson told the National Geographic last year.

The reef system lies worryingly close to several offshore blocks awarded for oil exploration in the Foz do Amazonas Basin, including Total’s blocks, the closest of which is around 8km from the reef. This discovery has thrown a spanner in the works for Total and its partners, which are still waiting for environmental approval from IBAMA to begin exploration and now face growing opposition from environmental activists and other groups, setting up a contest between two competing discoveries – the basin’s hydrocarbon potential and its richer-than-expected natural eco-system – whose needs appear to run counter to one another.

Protecting the Amazon Reef
The proximity between sections of the reef and the offshore drilling blocks has prompted an outcry from environmentalists looking to ensure that this unique marine habitat remains undisturbed. The scientists responsible for the discovery have been forthright with their concerns about exploratory drilling in the area, arguing in the key study of the reef, published in the Science Advances journal, that more must be understood about this region before a proper judgement on the oil industry’s impact can be made.

“These blocks will soon be producing oil in close proximity to the reefs, but the environmental baseline compiled by the companies and the Brazilian government is still incipient and largely based on sparse museum specimens,” the study noted in its conclusion. “Such large-scale industrial activities present a major environmental challenge, and companies should catalyze a more complete social-ecological assessment of the system before impacts become extensive and conflicts among the stakeholders escalate. The feasibility of oil and gas operations may be assessed by considering environmental and social sensibilities, but even the extent of the overlap of exploratory blocks with sensitive areas remains unclear.”

Published in Economy

Plans to reduce forest protections linked to attacks on inspectors and campaigners, environmental groups said after two land rights activists murdered.
Environmental campaigners have blamed the Brazilian government and Congress for intensifying violence in the lawless Amazon after two land activists were murdered and a transporter carrying vehicles for Brazil’s environment agency was torched last week.
Activists said plans to reduce forest protection gave farmers, loggers and land grabbers a sense of impunity to attack government inspectors and activists squatting rural properties.

Published in Economy

Scientists have discovered the river reef is far bigger, and more important, than first thought – a biodiversity hotspot on a par with the Great Barrier Reef. Now they face a race to protect it from big oil.
There is a flickering, bright glimmer of sky as the two-person submarine descends beneath the muddy equatorial waters to a place no human has ever seen – a vast, complex coral reef at the mouth of the world’s greatest river.

Thirty metres under the murky plume of the sediment-heavy Amazon, the sub enters a darker, richer world. A school of curious remora fish approaches the two-tonne machine. Crabs and starfish loom in its eerie lights. A metre-long amberjack swims past, then a two-metre ray.

At a depth of 80 metres, the pilot pauses to record large mounds of coral covered in rainbow-coloured pygmy angelfish, wrasses and parrotfish. There are sponges 30ft long.

At 120 metres the sub settles on the nearly level ocean floor in a field of soft coral, sea whips and fans. The pilot manoeuvres its remote cameras to within inches of the reef wall. It consists mainly of sponges and colourful rhodolith beds – masses of coral-like red algae – which are formed by chemical synthesis and thrive in the low light.

Published in Business

Oil companies planning to drill near a vast coral reef at the mouth of the Amazon river have calculated that the unique ecosystem has a 30% chance of being affected in the event of an oil spill.

'We are rewriting the textbooks': first dives to Amazon coral reef stun scientists
Read more
The unique reef system astonished marine biologists when its existence was widely revealed last year, and is believed it could be the home for dozens of previously unknown species. But activists warn that an oil spill could irreparably damage the 1,000 kilometre-long ecosystem before scientists have even had a chance to study it.

“It’s unlike any other reef that we know about,” said Sara Ayech, an oil campaigner at the London offices of Greenpeace. “If the companies drill there’s a risk of an oil spill and if an oil spill hits the reef, then we could see parts of it destroyed before we even document them.”

Published in Business

Deforestation in Brazil is at a nine-year high. President Michel Temer's political horse trading could make it worse.
Brazilian President Michel Temer’s June 26 indictment on corruption allegations marked a new peak in the country’s political crisis. While the charges grabbed global headlines, they also overshadowed the environmental crisis unfolding in the Brazilian Amazon, where vast tracts of protected forests and indigenous territories are under growing threat.

Brazilian forests are being felled at the fastest rate in nearly a decade, with the rate of deforestation jumping 29 percent since 2015 and 75 percent since 2012, according to satellite monitoring. Instead of bolstering the protections that helped Brazil reduce deforestation rates last decade, the Temer administration is bartering the forests’ future for political support from the powerful congressional bloc that represent the country’s big farmers, cattle ranchers, land speculators, loggers, and mining companies – the ruralistas. It’s a dangerous, short-sighted gamble, trading short-term political gain for long-term forest health – and one from which the Amazon may not recover.

It is also not guaranteed to save the president. Nevertheless, since he took office following the impeachment of former President Dilma Rousseff on August 31, 2016, Temer’s government has overseen a rollback on environmental and human rights protections, targeting the territorial rights of Brazil’s indigenous peoples while articulating plans to slash safeguards on the Amazon’s forests and gut the country’s environmental licensing standards for high-impact projects like dams and roads.

The president appointed as minister of justice a prominent member of the ruralistas, Osmar Serraglio, who authored a constitutional amendment to halt the titling of indigenous lands. Serraglio was later fired, but the current agricultural minister, Blairo Maggi, is one of the world’s largest soybean producers and winner of Greenpeace’s “golden chainsaw” for his leading role in felling Amazonian forests.

Despite appointments and proposals aimed at curtailing existing protections, the administration has worked to greenwash its actions, especially on the international stage. On the eve of his trip to Russia and Norway on June 19, Temer vetoed contentious amendments to two proposed laws that would have opened up around 2,300 square miles of rainforest to land-grabbing and deforestation. The amendments aimed to downgrade the Jamanxim National Forest and National Park, located adjacent to the so-called Soy Highway in the western Amazonian state of Pará, from Conservation Units to the weaker status of Environmental Protection Areas, which would allow for agribusiness and extractive industry to expand across vast, currently preserved ecosystems.

The reprieve will likely be short lived. Preceding the veto, environment minister José Sarney Filho, flanked by a ruralista ally from Pará, issued a video announcement that the government would introduce a new bill that essentially resurrects the rollbacks vetoed by the president. Given that the ruralistas are a dominant voting bloc in Brazil’s Congress, the bill should have smooth passage.

The presidential vetoes were clearly an effort to salvage the administration’s image with the Norwegians, who have contributed more than $1 billion since 2008 to Brazil’s “Amazon fund.” It didn’t work. When Temer and Sarney Filho arrived in Oslo, Norway’s Ministry of Climate and Environment announced that it would cut its contribution to the fund, committing only a third of its average annual donation in 2017. The Ministry statement cited last year’s 29 percent jump in deforestation as the reason for this drastic shift, saying it would increase disbursements to previous levels if deforestation were to drop again.

Published in Economy

Jorge Antonini takes a palm kernel in his hands and slices it open. Squeezing it between his fingers, the kernel oozes the oily liquid found in hundreds of everyday products, from cakes to chocolate spread.

The scientist is standing on a government-owned farm near the Brazilian capital of Brasília. Here, he and a small group of colleagues from Embrapa, the powerful state-owned agricultural research agency, are trialling different methods of growing oil palms to improve yield.

Published in Economy

Norway has issued a blunt threat to Brazil that if rising deforestation in the Amazon rainforest is not reversed, its billion-dollar financial assistance will fall to zero. The leaders of the two nations meet in Oslo on Friday.

The oil-rich Scandinavian nation has provided $1.1bn to Brazil’s Amazon fund since 2008, tied to reductions in the rate of deforestation in the world’s greatest rainforest. The destruction of forests by timber and farming industries is a major contributor to the carbon emissions that drive climate change and Norway views protecting the Amazon as vital for the whole world.

The rate of deforestation in the Amazon fell steadily from 2008 to 2014, an “impressive achievement” which had a “very positive impact” on Brazil and the world, according to Vidar Helgesen, Norway’s environment minister.

But in a forthright letter to Brazil’s environment minister, José Sarney Filho, seen by the Guardian, Helgesen said: “In 2015 and 2016 deforestation in the Brazilian Amazon saw a worrying upward trend.” He warned that this had already reduced Norway’s contributions and added: “Even a fairly modest further increase would take this number to zero.”

Published in Economy

The Brazilian state of Pará, neighbouring Suriname and in the Brazilian Amazon will receive a $26.4 million loan from the Inter-American Development Bank (IDB) to stimulate its ecotourism activity in the region in order to generate new employment opportunities and increase household income. 
The State of Pará with excellent connections to Suriname, has vast environmental assets and cultural resources that might serve as basis for a strong tourism industry, but this potential has not yet been fully developed. Pará receives only 0.29 of the international tourism that visits Brazil.

Published in Finances
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