Brazil's Petrobras to appeal ban on drilling near sensitive Amazon site

Brazilian state-run oil company Petrobras (PETR4.SA) will next week appeal the decision from environmental regulator Ibama barring it from drilling an oil well near the Amazon river, the company said on Friday.

The dispute marks an early test for leftist President Luiz Inacio Lula da Silva, who has sought to balance environmental concerns against the need to promote economic development at a time when government finances are tight.

Petrobras believes it is possible to maintain equipment it has deployed to the drilling site through May 29 without additional costs, the company said in a securities filing.

The filing confirmed an earlier Reuters report citing sources that also indicated Petrobras expected a response from Ibama in about 10 days.

Earlier in the week, Ibama announced it will block a request by Petrobras to drill at the environmentally sensitive location in the basin of the mouth of the Amazon river, South America's largest, near Amapa state. The long-awaited decision followed a technical recommendation by experts from the regulator to reject the project.

The technical report had cited discrepancies in environmental studies, inadequate measures for communicating with indigenous communities and to safeguard the region's wildlife.

In the filing, Petrobras said it had "strictly complied" with all licensing requirements.

The decision by Ibama, which is overseen by Lula's environment minister, the globally recognized environmentalist Marina Silva, has riled some within the governing coalition.

Later on Friday, the Brazilian prosecutor's office issued a statement recommending Ibama reject the drilling project and said it would keep monitoring the case.

Reuters