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Published  11 MIN READ

Investing in Latin America: Today’s Energy Market Transformation

With announcements of major potential investments of over $300 billion in the next 10 years, Latin America is rapidly becoming one of the most attractive regions globally for investments by the world’s largest oil companies. Compelling opportunities are emerging, such as Brazil’s pre-salt, Argentina’s shale and Guyana’s frontier oil play. Therefore, many governments are taking solid market-oriented approaches.

The opportunities come from a widespread recognition that resource nationalism has brought more impediments to the fore, raising the costs of production in a more competitive global environment characterized by an abundance of resources. Brazil and Guyana are benefitting from the dramatic drop in production costs and the security of investment capital, helping to lead to continued market liberalization and investments elsewhere, including in Argentina and Colombia. The opening in Mexico under its last government continues to provide attractive opportunities there as well. But elsewhere the history of resource nationalism has dramatically undermined the production system in Venezuela and poses obstacles to continued reform in Argentina, Ecuador and Mexico.

In this feature, Peter Langshaw, Citi’s Global and Latin America Sector Sales Head for Treasury and Trade Solutions, interviews some of the key policy makers, industry leaders and specialists within the region. This feature helps bring together key insights on why oil majors and national oil companies (NOCs) are embracing these market opportunities through new technology and the digitization transformation of the energy sector, and why it will contribute to future success.

“Latin America’s oil and gas industry is undergoing a dramatic transformation with huge potential investment opportunities for local and foreign firms, yet with a number of concerns. Even so, new huge developments in Latin America will keep the Atlantic Basin in surplus, especially in oil, and will help ward off the resource curse wherever production can grow.” 

Ed Morse, Global Head, Commodities, Citi


Brazil

Brazil offers one of the most promising oil and gas opportunities in Latin America, home to the largest offshore oil discoveries of the last decade, including most of the world’s deep-water oil discoveries and 36% of the world’s oil discoveries.[1] Huge potential remains in onshore, conventional offshore and unconventional deep-water, pre-salt reserves. Currently, there is less than five percent of the sedimentary areas contracted,[1] which presents a significant opportunity for expanded exploration of oil and natural gas reserves.