By Brazil Stock Guide — Brazil’s government has cleared the way for the potential auction of 52 oil and natural gas exploration blocks while simultaneously advancing plans to gradually reduce the country’s dependence on fossil fuels. The two initiatives, announced on Friday, underscore President Luiz Inácio Lula da Silva’s challenge of reconciling the expansion of Brazil’s oil industry with its energy transition commitments.
Energy Minister Alexandre Silveira and Environment Minister João Paulo Capobianco signed two ordinances reviving the Environmental Assessment of Sedimentary Areas (AAAS), a regulatory mechanism designed to identify areas suitable or unsuitable for oil and gas exploration before exploration blocks are offered at auction.
The government set a 30-day deadline to approve completed assessments covering the Solimões Basin in the Amazon region and the Sergipe-Alagoas/Jacuípe basins off Brazil’s northeastern coast.
Once the assessments are approved, the government could offer 29 offshore blocks in Sergipe-Alagoas/Jacuípe and another 23 onshore blocks in the Solimões Basin. According to the Ministry of Mines and Energy (MME), the areas have significant potential to expand Brazil’s hydrocarbon reserves, particularly natural gas, which is increasingly viewed as important for energy security and industrial competitiveness.
The resumption of environmental assessments is also intended to reduce regulatory uncertainty for companies considering investments in new exploration frontiers. The process allows authorities to identify environmentally sensitive areas and establish restrictions before holding auctions. Approval of an assessment, however, does not constitute authorization to drill. Individual exploration projects will remain subject to environmental licensing requirements.
Pelotas Basin Moves Up the Exploration Agenda
A separate ordinance establishes an interministerial technical committee to prepare the terms of reference for an environmental assessment of the Pelotas Basin, located offshore southern Brazil, along the coasts of Rio Grande do Sul and Santa Catarina. The basin is regarded as one of the country’s emerging exploration frontiers and has already attracted interest from major international oil companies.
The assessment will help determine which additional areas could be made available in future licensing rounds. The committee will include representatives from the energy and environment ministries, environmental agencies Ibama and ICMBio, oil regulator ANP and the Energy Research Office (EPE). The measure does not authorize new auctions or drilling operations at this stage.
Several oil companies already hold exploration rights in the Pelotas Basin. In December 2023, 44 blocks were awarded in the region, including areas acquired by Petrobras in partnership with Shell and China’s CNOOC, while U.S. oil major Chevron secured 15 blocks. Three additional blocks were awarded in June 2025. The new environmental assessment is intended to guide future offerings rather than alter existing exploration contracts.
Oil Expansion Meets Energy Transition
The measures were announced on the same day that Brazil’s National Energy Policy Council (CNPE) approved guidelines for developing a roadmap to gradually reduce the country’s dependence on fossil fuels. An interministerial working group will have 270 days from its formal establishment to prepare the plan, with a possible 90-day extension.
The roadmap is expected to address the economic and social consequences of the energy transition, including employment, government revenue, industrial competitiveness and energy security. Despite its stated objective of reducing fossil fuel dependence, the initiative does not establish a ceiling on Brazilian oil production or prohibit exploration in new frontier areas.
The combination reflects the Lula administration’s strategy of preserving the economic contribution of oil and gas production while preparing for a longer-term shift toward lower-carbon energy sources. The industry remains an important source of government revenue, exports and capital investment, even as Brazil seeks a greater role in international efforts to decarbonize the global economy.
Leave a Reply