Policy roadmap for governing new oil frontiers under environmental constraints: Lessons from Brazil's Foz do Amazonas basin

Brazil's Equatorial Atlantic Margin has emerged as a contested oil frontier where energy expansion intersects with biodiversity priorities and unresolved governance challenges. In the 5th Permanent Offer Round (2025), the Foz do Amazonas Basin concentrated about 85% of total signing bonuses (US$153 million), despite pending environmental licensing and limited geological knowledge. This study examines how frontier investment dynamics interact with environmental sensitivity and governance risks. We integrate auction data, spatial biodiversity diagnostics, and a qualitative risk framework to assess three dimensions: economic attractiveness revealed through bidding behaviour, spatial overlap with priority conservation areas, and actor-specific exposure risks. Results show that nine high-premium blocks directly overlap areas classified as “extremely high” biodiversity priority, while ten others are located in zones considered “insufficiently known”, creating a layered risk configuration. These dynamics generate potential stranded exploration capital and reputational exposure for firms, fiscal and policy credibility risks for the state, and reinforced extractive dependency for local communities. We propose a three-pillar policy framework structured as a ladder of ambition, combining improved regulatory sequencing, regional development funding mechanisms, and financial instruments to compensate foregone extraction in ecologically sensitive areas.