Despite the increase in international crude oil prices in 2018, many Latin American countries are still struggling to cope with the debt crisis and oil and gas production is declining. Recent discoveries of oil and gas and licensing rounds in the region have attracted strong growth in foreign investment, which may be the key to the region’s economic recovery.

Argentina: Pushing Shale Development

Argentina is trying to boost oil and gas exploration and production because of high inflation and declining oil production. Argentina has abundant shale reserves. Although in recent years it has also changed from a major net exporter of natural gas to a net importer, the government is vigorously promoting the development of shale resources in order to help the energy industry out of its predicament.

It is reported that the Vaca Muerta shale in Argentina’s Neuken Basin contains 16 billion barrels of oil and 308 trillion cubic feet of recoverable natural gas. Many international oil giants and investors are showing more interest in the area.

In 2017, the German Wintershall Company launched the first of three horizontal directional wells in Bandurria Norte block, Sinaiuken Basin. According to the company, up to now drilling activities are still mainly concentrated in conventional oil and gas reservoirs.

Several oil giants have also cooperated with Argentina National Petroleum Corporation (YPF) in shale exploration. Equinor and YPF signed an agreement that each of the two companies holds a 50% stake in oil and gas exploration in Western Argentina. In addition, major oil and gas giants are investing $1.15 billion in the development of Vaca Muerta reservoir. YPF, Total, Wintershall and Pan American Energy decided to invest jointly. Total owned 41% and was responsible for exploration and development in the east of Aguada Pichana, while BP owned 45% of Pan American Energy and operated the west of Aguada Pichana and the Aguada de Castro block.

ExxonMobil is another oil giant actively involved in the development of Argentina’s Neuken Basin. The company said it has invested more than $500 million in the exploration and development of its Vaca Muerta assets since it entered the region.

Venezuela: ambitious plan

Although Venezuela has the largest oil and gas reserves in the world, it has failed to maintain its position as the largest oil exporter in the Americas. Since President Nicolas Maduro took office in 2013, oil and gas production has fallen sharply. The situation deteriorated further in 2018, with crude oil production falling from 2.15 million barrels per day to 1.25 million barrels per day in the third quarter of 2018, compared with about 3 million barrels per day five years ago.

Recently, the production of overweight crude oil in the Orinoco Belt has been helping Venezuela’s oil industry to survive. Located in Gurigo, Venezuela, the heavy oil belt has the largest oil reserves in the world. By the end of 2017, however, Orinoco’s oil production had fallen to 82,200 barrels a day, down more than 300,000 barrels a day from the previous year. It has been reported that the decline in production is partly due to the decline in the quality of Venezuela’s oil, including high salinity and high water content. Meanwhile, Venezuela National Petroleum Corporation (PDVSA) continues to suffer from debt problems due to its operation and cash flow problems.

However, PDVSA has ambitious plans for the future and expresses its hope to increase Venezuela’s oil production to about 6 million barrels per day by 2019, of which 4 million barrels per day are expected to come from the Orinoco heavy oil belt. The company’s plan calls for a substantial increase in natural gas production by 2019, aiming to reach 10.5 billion cubic feet per day. Meanwhile, by 2019, we hope to achieve the target of 1.3 million barrels per day of oil exports to Latin America and the Caribbean and 3.2 million barrels per day of oil exports to Asia.

Brazil: Deepwater Oil and Gas Favored

Brazil’s subsalt oil remains a target for explorers. As Latin America’s largest country, Brazil’s influence on the future international energy market continues to grow. Fatih Birol, Director of the International Energy Agency (IEA), stressed that the country has set an example for the rest of the world in its “firm and ambitious long-term energy policy, deep-water oil resources development and biofuel production expansion”. According to the IEA, Brazil’s net oil exports are expected to reach 1 million barrels per day by 2022. This is the result of a 50% increase in the country’s oil production over the past 10 years, largely due to the development of deep-water oil resources.

Libra Oilfield is the deepest oil reservoir in the world. It began production in November 2017. Shortly afterwards, the Libra consortium of Petrobras, Shell, Daudal, CNOOC and PetroChina confirmed the commerciality of the northwestern oil and gas reservoirs in the block, known as Mero Oilfield. Petrobras said the new field estimated 3.3 billion barrels of recoverable oil. The development plan for the Muro oilfield in Rio de Janeiro, located in the Santos Basin, includes four new production systems. According to Dodar, Libra will produce more than 600,000 barrels a day in the next few years.

In April 2018, Petrobras announced the start of production of Bzios Oilfield, one of its major subsalt oil projects. The report says four more production platforms are planned to be built by 2021 because of its high production potential.

Guyana: Hope to come back

With ExxonMobil’s major discoveries of oil and gas, Guyana has become a hot spot for oil majors. Guyana is not yet an oil producer. However, Wood McKenzie, an energy consultancy, says it expects to become one of Latin America’s largest producers by 2026, with production expected to reach 350,000 to 400,000 barrels a day.

ExxonMobil’s offshore Liza oil field in Guyana has a resource of 2 billion to 2.5 billion oil equivalents and is expected to start production in 2020. ExxonMobil discovered 59-foot-thick high-quality oil-bearing sandstone in well Payara-2, confirming that it is expected to become the second giant oil field in Stabroek block. The estimated resources of Payara oilfield have increased to about 500 million barrels of oil equivalent.