A diplomatic cable – which officials failed to redact – shows that Greg Hands discussed the oil companies’ tax and environmental concerns with Brazilian minister
Joe Sandler Clarke
A minister from Liam Fox’s Department for International Trade (DIT) lobbied the Brazilian government to smooth the path for BP and Shell to secure oil blocks in the country’s controversial pre-salt region, according to a diplomatic cable that officials accidentally failed to redact.
The document – obtained byUnearthed –details a March trip to Brazil by DIT minister Greg Hands. It reveals that, at a “private breakfast” in Rio de Janeiro, Shell, BP and Premier Oil relayed their concerns “around taxation and environmental licensing” to the minister.
The cable states that Hands was then able to raise those issues “directly” with Brazil’s deputy minister for mines and energy, Paulo Pedrosa.
According to the document, Pedrosa then “confirmed that his ministry is already lobbying its relevant counterparts within the Brazilian government”.
Brazil’s government went on to make aproposal for up to $300bn in tax reliefto companies that develop offshore oil and gas in the country.
The UK government also welcomed a move by the Brazilian government to reduce “local content requirements” – rules requiring foreign companies to do things like hire domestic workers and use domestic goods to operate in a country – according to the document.
Brazil is seen by the government as an important trading partner for the UK, as the country prepares to leave the EU.
As the cable states “Hands’ visit means Brazil is only the third country after the US and Germany to receive all four DIT ministers since the department’s creation”. Liam Foxvisited the countryin December last year.
In response to this story, a DIT spokesperson toldUnearthed: “the meeting was about improving the environmental licensing process, ensuring a level playing field for both domestic and foreign companies, and in particular helping to speed up the licensing process and make it more transparent, which in turn will protect environmental standards”.
The spokesperson added: “DIT is responsible for encouraging international investment opportunities for UK businesses, whilst respecting fully local and international environmental standards. The UK oil and gas industry and supply chain supports thousands of jobs and provides £19bn in goods exports alone.”
Brazil’s massive offshore oil find
There is believed to be billions of barrels of oil underneath a thick layer of salt off the coast of Brazil in the Atlantic ocean. The Tupi was the first of these oil fields to be discovered in 2007, and is thought to contain between 5bn and 8bn barrels of oil. Brazilian politicians hope that the massive oil find can spur economic development. But environmental groups have urged officials to keep the oil in the ground, as it could use up much of the world’s carbon budget and accelerate climate change.
It is has been estimated that 176bn barrels of oil are buried beneath thousands of feet of salt in the Atlantic ocean.
Environmental campaigners have warned that drilling in the region could accelerate climate change and have urged the government to leave the oil in the ground.
But the Brazilian government is reportedly keen to sell off the blocks as quickly as possible, in case global efforts to tackle climate change risk making major new oil projects uncompetitive.