Brazil’s government may have lifted one of the key hurdles for Petrobras to drill at a promising offshore oil region, a move that could escalate a standoff between the oil company and environmental authorities.

A major impact study that the Ibama environmental agency is demanding isn’t necessary for the project, the attorney general’s office, or AGU, said in an opinion that was released on Tuesday. It sent the case to a mediation chamber to start a reconciliation process between the federal agencies involved.

Petroleo Brasileiro SA, as the Rio de Janeiro-based producer is known, is “fully willing” to join the mediation to solve any disagreements, it said in a message on Wednesday. The oil giant considers to have met all the necessary requirements to start work, adding that it’s open to any new requests.

In May Ibama blocked Petrobras from exploring the Foz do Amazonas basin out of environmental and social concerns. The license where Petrobras plans to drill was auctioned in 2013 and has been held up ever since.

Mines and Energy Minister Alexandre Silveira supports the exploration project and had asked the attorney general’s office to rule on if an impact study was necessary. Meanwhile, Environment Minister Marina Silva, who oversees Ibama, has raised concerns about developing a region off the coast from where the Amazon River flows into the Atlantic.

Silva has so far resisted pressure from other parts of government. The absence of a major impact study was not the only reason why Ibama has blocked Petrobras’s drilling request, the Environment Ministry said in an emailed response. It also cited “inconsistencies” in information provided by the company.

Ibama said it has received the attorney’s general’s opinion and will comment in due course.

President Luiz Inacio Lula da Silva’s administration is confronted with the competing priorities of growing the economy and protecting the environment. The debate about offshore drilling in Brazil comes as Colombia and Ecuador move to constrain the oil industry.

Ecuadorian voters passed a referendum this month to shut a major oil field in its Amazon region. Colombia’s Gustavo Petro is against exploring for oil at new areas and slammed “denialism” about climate change at an environmental summit in Brazil earlier this month.

Source: finance.yahoo.com