October 9, 2019 / 7:22 PM / 7 days ago

Brazil authorities raise environmental concerns around oil auction

RIO DE JANEIRO (Reuters) - Seven exploratory oil blocks set to be auctioned by Brazil on Thursday are the subject of environmental litigation, authorities said on Wednesday, complicating a process expected to bring around $800 million into state coffers.

In a statement published on Wednesday, federal prosecutors in the state of Bahia, who are bringing the suit, said a court had determined that the ongoing case be made public since the auction is imminent. Federal prosecutors are arguing that the seven blocks pose a danger to the ecologically sensitive Abrolhos Archipelago, the statement said.

As of Wednesday, the blocks were still set to be auctioned off, although there is significant judicial uncertainty as to how and when they will be explored.

The seven blocs are relatively small. Minimum signing bonuses for the seven blocks come to slightly over $16 million combined, or about 2% of the minimum signing bonuses for all 36 blocks set to be auctioned off on Thursday.

Still, it has garnered significant attention from environmental groups, who say a spill in the blocks in question could be catastrophic, given the abundant wildlife around the islands. The seashore near the islands is also home to a significant tourism sector.

Crude oil of unknown origins has washed up on beaches throughout northern and northeastern Brazil in recent weeks, further bringing environmental concerns into focus.

While Environment Minister Ricardo Salles said on Wednesday the oil was “very likely” Venezuelan, the government has not definitively identified the source of the spills.

Reporting by Gram Slattery and Marta Noguiera; Editing by Bill Berkrot

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