As Brazil’s oil industry grows, environmentalists raise red flags

RIO DE JANEIRO, (Reuters) - As executives gather in Rio de Janeiro ahead of a blockbuster offshore oil auction, a mysterious crude spill is raising questions about whether Brazil’s oil industry is growing faster than the government’s ability to police it.

For two months, a thick, crude sludge has been washing up on the beaches of northeastern Brazil, a poorer region dependent on fishing and tourism. Last week, the government said more than 600 tonnes of it had been collected from the coastline.

The environmental disaster is a black eye for Brazil on the eve of one of the highest-grossing oil auctions ever, in which the government aims to rake in more than $25 billion from global oil companies, cementing the country’s status as the hottest play in Latin America for Big Oil.

Monitoring and responding to incidents in deepwater fields hundreds of miles off the coast represents a challenge for any government, but critics say Brazil’s ineffective handling of the crisis on its northeastern beaches has been especially alarming.

Prosecutors, politicians and environmental groups have blasted the government for what they call a slow and fumbling response. In many cases, residents have cleaned local beaches by hand, rolling up globs of oil and stuffing them in trash bags, only to fall sick from exposure.

“We received various reports from towns that were being affected by the oil, and they told us they needed more support to protect their ecosystems,” said Cristina Graça, a prosecutor in Bahia state, who has criticized the government’s response.

“We saw in some towns ... people were doing the clean-up work with no equipment or with no training.”

Brazil has an official contingency plan for oil spills, but the government said it was not activated until early October, more than a month after the oil started washing ashore.