26/05/11
Latam producers take strait shot at investment
Houston, 11 May (Argus) — Latin America's fastest growing crude producers —
Brazil, Guyana and Argentina — gushed at last week's Offshore Technology
Conference in Houston, Texas, about how their upstream opportunities are even
more attractive because of the war in the Middle East. Brazilian crude exports
"do not go through a strait", and offer an alternative to reliance on producers
around a troubled Mideast Gulf, as Brazilian oil regulator ANP's
director-general, Artur Watt, said. The three countries together already produce
about 6mn b/d of crude, including a record 4.2mn b/d from Brazil in March, more
than 900,000 b/d from Guyana and almost 900,000 b/d from Argentina. The 6mn b/d
is six times Venezuela's production, and far above Mexico's 1.64mn b/d. But the
three fastest-growing non-Opec producers want more investment to ensure the
streak continues. Brazil needs to replace reserves to face a possible decline
after 2030, Argentina has still not fully tapped its onshore Vaca Muerta
formation and Guyana is seeking more investors beyond the ExxonMobil-led
consortium that is its sole producer. But upstream investment is tight globally,
with two-thirds of energy investment this year going to renewable energy, the
IEA has forecast. Guyana's president, Irfaan Ali, called last week for the
investment gap between renewable and fossil energies to be closed, to ensure
enough fossil fuels can be produced to provide base-load energy supply. Oil
service provider Baker Hughes expects a low single-digit fall in upstream
investment globally this year. It called for more investment , particularly in
Latin America as well as the US and other deepwater regions. But even with big,
beautiful blocks, the region will have to fight for its share of a shrinking pie
to not miss this shot at expansion, government and company officials
acknowledged. In Brazil, even seismic data are "beautiful", as a government
promoter put it while touting the offshore Mogno block — in the prodigious
pre-salt and which Brazil hopes to auction this year — to a room of potential
investors. Not as big but almost as beautiful as Buzios, one of the world's
largest deepwater fields, ANP superintendent Marina Abelha said at a roadshow of
2026 offerings. But the country will need to work on the "predictability,
stability and pace" of its oil investment environment to remain competitive as
global capital grows increasingly selective, its leading private-sector producer
Shell's vice-president of pre-salt operations, Pablo Tejera Cuesta, said. While
Brazil is highly attractive for capital, "it doesn't necessarily mean it is here
to stay unless we fight for it", he said. "It is not a question of demand, but
where does the capital flow and why." Brazil is working on ways to spruce up its
offers, state officials said, including increasing an offer of barrels for
export this year, building a digital bidding platform for acreage auctions and
constantly reviewing new areas to offer. Scale and pace Argentina is banking on
its large-investment promotion scheme, Rigi, to pull in more upstream spending.
The country needs more partners given the scale of infrastructure required,
state-owned YPF's chief executive, Horacio Marin, said. "We need all the
companies to build a profitable ecosystem," he added. Guyana is also reviewing
investment and related laws, even after passing its petroleum investment
framework law in 2023, Bobby Gossai, a senior adviser to the natural resources
ministry, said. It also recently signed an agreement to start 6-12 months' work
on 3D seismic offshore, to process data for future bidding rounds. It wants
these to be "a little more business-friendly and investment-friendly", he said,
even if not as big as Stabroek, Guyana's only producing block. "You are pushing
at an open door," Gossai said. "Guyana is open for business." By Carla Bass Send
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