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South American oil and gas

Hydrocarbon Engineering,


Resolution of the Repsol YPF dispute has now taken down all barriers to international investment from oil companies looking for a way in to the Argentinean oil and gas sector. An increase in investment is expected to push the market forward and BMI see this continuing in the short term at least. The reform of the country’s fiscal regime is also expected to help the country’s operating environment. A cut in export taxes on domestically produced oil is likely going to increase the country’s attractiveness to foreign oil and gas investors.

Also, there is shale potential in Argentina according to BMI and this is expected to encourage high levels of investment. So far Chevron has invested US$ 1.6 billion in shale in the country and Dow has invested US$ 120 million. Conventional oil production is however under pressure and BMI expects Argentina to produce 745 000 bpd by 2018 and 816 000 bpd by 2023.


BMI has said that Cameroon is a small producer of oil and is only just entering the gas market. However, the proposed GDF Suez LNG terminal is expected to have production of over 5 billion m3 by the end of 2023. Looking downstream, Cameroon’s only refinery is expected to expand its processing capacity to 70 000 bpd. This will of course boost refined fuels production, but it will also allow the processing of domestic heavy crudes as opposed to relying almost 100% on Nigerian crude oil imports as is the case at the moment.


BMI expects the energy reforms in Mexico to mark the dawn of a new era in the country’s oil and gas sector. However, the company has said that it will take several years before results are felt in the country’s hydrocarbon production and reserves figures, but in the long term investment is expected to thrive and reverse declines in oil production.


BMI expects Peru’s oil and gas production to increase to 2023 as the country is home to a favourable business environment as well as attractive fiscal and licensing terms and a supportive government. BMI particularly sees positive potential coming from revisions to the country’s hydrocarbons law, which will remove bureaucratic obstacles.

BMI sees natural gas output increasing from 12.3 billion m3 in 2013 to 15 billion m3 in 2018 and even higher to 17.8 billion m3 in 2023. Gas demand is also expected to continue to increase up to 2023 but at a slower pace than previously anticipated. Consumption will move from 2013 levels of 6.3 billion m3 to 8 billion m3 in 2018 and 10.6 billion m3 in 2023. Liquids production from the country is also expected to increase, with the help of NGLS, from 2013 levels of 174 390 bpd to 194 600 bpd in 2018 and 218 000 bpd in 2023.

Trinidad and Tobago

Trinidad and Tobago has managed to minimise the impact of falling US demand, according to BMI, by securing new markets domestically and in Asia for LNG exports. However, the gas market is expected to face further risks as it adjusts to new global gas market dynamics. Gains in both oil and gas production are expected by BMI over the next 10 years, however, the recent growth in gas output is expected to slow.

Looking downstream, investment should help diesel and gasoline exports, but this will be at the expense of fuel oil supplies. Trinidad and Tobago is however expected to remain a key supplier of refined fuels to the Caribbean market as a whole.


BMI is keeping a cautious outlook when it comes to Venezuela as the country is expected to continually under perform due to the challenges faced such as political interference, underinvestment, an unattractive operating and investment environment and the turbulent financial standing of PDVSA.

PDVSA has signed a fiver year agreement with Rosneft for oil and oil product supplies. This contract will mean that PDVSA sends 1.6 million t of oil and 7.5 million t of oil products over the agreed period. The total value of this deal was not disclosed, however Rosneft did make a prepayment of US$ 2 billion. Despite this however, PDVSA’s fuel sales have dropped and in 2013 were down 8% year on year. The drop has been attributed by BMI to a 5.6% year on year fall in exports of crude oil and refined products as well as a drop in domestic oil prices.

Looking at Venezuela’s refining sector, the country’s operating capacity is under pressure at the moment due to problems at the Paraguana Refining Centre which has been running at only 62% of total capacity. This, BMI says, has reinforced its negative assessment of Venezuela’s downstream industry, mainly because of under investment and mismanagement.

Edited from report briefs by Claira Lloyd

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