Latin America emerged over the last two decades as one of the world’s top oil-producing regions. This occurred because of Brazil’s immense offshore oil boom driven by that country’s ultra-deep-water pre-salt oilfields. While regional production declined due to the collapse of Venezuela’s petroleum industry under the weight of corruption, malfeasance, and harsh U.S. sanctions, Latin America is attracting considerable interest from foreign energy companies. Guyana’s emergence as a regional petroleum producer, with its offshore oil boom described as the world’s hottest frontier play, is adding to significant international interest in the region. While Guyana has experienced a prodigious expansion of reserves and production it has yet to emerge as a top-five oil producer in Latin America and the Caribbean. Here are Latin America’s five largest oil producers.
Coming in fifth place is economically crisis-riven Argentina which is Latin America’s third-largest economy. For 2022, Argentina pumped a record high of 582,387 barrels of crude oil per day, which was 13% greater than a year earlier and 14.5% greater than the 508,645 barrels per day lifted during 2019. March 2023 petroleum output set a new monthly production record averaging 631,103 barrels per day. This indicates that Argentina’s oil industry has recovered from the pandemic and that production is steadily expanding as investment inflows grow.
There are signs Argentina’s hydrocarbon production will climb further with the Vaca Muerta shale formation, believed to contain 16 billion barrels of oil and 308 trillion cubic feet of natural gas, the engine of that growth. The exploitation of the geological formation is viewed by Buenos Aires as an economic silver bullet. Development of the Vaca Muerta is being spearheaded by national oil company YPF, which was nationalized by the government of Cristina Fernandez de Kirchner in 2012. By March 2023, shale oil comprised 48.5% of Argentina’s total petroleum output up from 40.5% a year earlier.
Foreign energy investment is also growing in part because of firmer oil prices but also due to President Fernandez implementing a package of tax and customs benefits for foreign energy companies operating in Argentina in August 2022. It is forecast that Argentina’s oil production will grow to one million barrels per day by 2026 which will facilitate a notable increase in petroleum exports to 500,000 barrels per day.
The fourth largest oil producer in Latin America is strife-torn Venezuela. After pumping an all-time high of 3.2 million barrels per day during 1997, according to OPEC data, production collapsed plummeting to a multi-decade low of 569,000 barrels per day for 2020 as the COVID-19 pandemic swept across the world. Since then, Venezuela’s oil output has recovered, somewhat, due to Caracas receiving assistance from allies such as Iran to rebuild heavily corroded infrastructure. OPEC secondary data sources show that Venezuela pumped an average of 678,000 barrels per day for 2022 which grew to 695,000 barrels per day for March 2023.
Despite the Biden White House easing some sanctions including allowing energy supermajor Chevron to return to lifting oil in Venezuela, there are signs that the OPEC member will struggle to lift production any higher. Shattered oil industry infrastructure including leaking pipelines, inoperative refineries, and faulty wells are all weighing on operations. It will take tremendous investment, estimated to be as much as $120 billion, and at least a decade to rebuild Venezuela’s oil industry. Caracas will not be able to attract that level of industry investment until the rule of law is guaranteed and strict U.S. sanctions are substantially loosened.
For a country with proved oil reserves amounting to a meager two billion barrels, strife-torn Colombia punches above its weight production wise having pumped an average of 754,199 barrels of oil per day for 2022. That impressive output ranks Colombia as Latin America’s third-largest oil producer. By March 2023 output had risen to 771,732 barrels of oil per day, but like 2022 that volume was still well below the 885,851 barrels lifted during 2019 and substantially less than record 2013 production of just over one million barrels per day reached during 2013.
Whether Colombia will remain among Latin America’s top five oil producers is questionable. The Andean country’s energy patch is being buffeted by many headwinds. Among the most severe are sparse proven oil reserves of just over two billion barrels, which will last less than eight years due to a lack of exploration. That, along with most oil being lifted from mature fields is weighing on production volumes.
Then there are the plans of Colombia’s first leftwing President Gustavo Petro to ban awarding new contracts for hydrocarbon exploration and hydraulic fracturing. The President and his Energy Minister Irene Velez confirmed that awarding new hydrocarbon exploration contracts will cease and there is also a bill banning fracking before the lower house of Colombia’s Congress. Any such move will not only deter investment in Colombia’s beaten-down hydrocarbon sector but damage the oil-dependent economy, where petroleum is responsible for a third of exports and nearly a fifth of government revenue.
It is strife-torn Mexico which is Latin America’s third-largest oil producer pumping 1.6 million barrels per day for 2022. That not only represented a 2.5% decrease compared to 2021 but was the lowest output since 1979 when annual production was an average of 1.5 million barrels per day. There are signs that Mexico is struggling to boost oil production and return to over two million barrels per day which was last seen in 2016, let alone the record high of 3.4 million barrels per day reached in 2004. For March 2023 oil production remained steady at around 1.6 million barrels per day.
Mexico’s national oil company Pemex, which is responsible for over 90% of national production announced disastrous first quarter 2023 losses, with net income of $3.15 billion for the period nearly half of the $6.2 billion reported a year earlier. Pemex continues to be weighed down by onerous levels of debt totaling $107 billion, making it one of the world’s most indebted energy companies. Despite efforts by the national oil company to expand output by bringing new oilfields online, which added 543,000 barrels daily during the quarter, the sharp production decline over the last decade appears irreversible.
Latin America’s largest economy Brazil is also the region’s largest oil producer pumping a record three million barrels per day for 2022 while total hydrocarbon output was 3.9 million barrels per day. The immense oil boom underway in Brazil keeps gaining momentum with the country’s vast offshore pre-salt oilfield attracting considerable foreign investment. Shell, Brazil’s second-largest oil producer behind Petrobras is investing heavily in offshore operations, although the surprise export tax introduced by the Lula administration perturbed the energy super major.
National oil company Petrobras will drive much of the anticipated oil production growth. In November 2022, Brazil’s national oil company announced it intends to invest $78 billion between 2023 and 2027 with 83% or $64 billion directed to upstream exploration and production. Over that period, Petrobras plans to add 18 FPSOs with seven earmarked for the Buzios field where the oil blend produced has proven particularly popular in China. Surging oil exports supported by steadily growing production were responsible for Brazil posting a record March 2023 trade surplus.
By Matthew Smith for Oilprice.com
More Top Reads From Oilprice.com:
- Oil Prices Sink As Inflation Anxiety Builds
- Russia Reports Attempted “Terrorist Attack” On Druzhba Oil Pipeline
- What’s Next For The World’s Largest Oil Company As Profits Decline?