A decision by the Brazilian environmental authority Ibama allows the state-owned oil company Petrobras $PETR3 (-1.36%)
$PETR4 (-0.96%) to take another step towards drilling for oil in a coveted offshore region, albeit with a significant caveat for future permits in the area.
Documents seen by Reuters show that IBAMA chief Rodrigo Agostinho warned in his decision against an "uncontrolled multiplication of future applications for environmental licenses" in the Foz do Amazonas basin, an oil production area near the mouth of the Amazon River.
The area in the northernmost part of Brazil's equatorial zone is considered the most promising oil production area for Petrobras, as it has geological similarities with nearby Guyana, where Exxon Mobil is developing huge fields.
However, Agostinho said it would be difficult to issue exploration licenses "piecemeal and sequentially" in the Foz do Amazonas basin without a complex environmental study (AAAS), which could take years to complete.
IBAMA had previously requested an AAAS to evaluate Petrobras' bid, but Brazil's attorney general issued a legal opinion stating that such an assessment should not prevent the granting of licenses.
Agostinho's new request adds to the uncertainty over future licenses in the region as Brazil prepares to auction new blocks in June.
For now, the head of the agency has approved a proposal from Petrobras on how to help local wildlife in the event of an oil spill in this ecologically sensitive region, which includes extensive coral reefs and indigenous coastal communities.
Petrobras welcomed the decision on Monday, calling it a green light to test its environmental contingency plan, which the company described as the last step before the final decision on whether to grant the license.
The breakthrough for Petrobras is a loss for IBAMA's technical staff, who had signed a document in February stating that the plan to save wildlife in the event of an oil spill had only a "slight chance" of success.
In 2023, IBAMA rejected an application from Petrobras to drill in the area, which the company immediately appealed, further exacerbating divisions in the Brazilian government between environmentalists and allies pushing for oil and gas development in the region.