Oil & Gas in the Capitals

Notwithstanding Latin America’s limited economic growth, exploration investments are the common denominator in the region’s major oil and gas plays. Ensuring self-sufficiency is still a determining factor for Argentina, which is seeking to increase its domestic production, while Colombia wants to expand its reserve base. Brazil is pursuing a strategy of national energy integration with the sale of assets, while investing in new gas pipelines to increase industrial activity. Venezuela continues to seek new financial resources in China, the only country that will support a corrupt government that, for several years, has undergone a serious economic crisis.

Argentina’s energy minister, Juan José Aranguren, confirmed that the investments from all companies in the oil and gas sector will reach $6.633 billion by the end of the year. The projected per-company spend is as follows: YPF, $3.09 billion; Pan American Energy, $960 million; Total, $628 million; Enap Sipetrol, $308 million; Petrobras, $186 million; Tecpetrol, $139 million; Pluspetrol, $130 million; and Sinopec,
$124 million.

According to an Argentine Institute of Oil and Gas report, at the end of April, operators were producing 453,000 bopd compared to 520,900 bopd during the same month of 2016. The loss of output represents a year-on-year reduction of 13%. However, natural gas production increased 0.2% during the same period.

Colombia. Deepwater exploratory drilling by Anadarko Petroleum and Ecopetrol led to the discovery of a major gas field that has added significant reserves to Colombia’s total resource base.Ecopetrol completed Kronos-1 in 2015, and the Purple Angel well in 2017. The company plans more exploration in the Fort South block, and at Caribbean deepwater locations in Sucre and Córdoba. Preliminary reserve estimates assigned to Anadarko’s discovery are in the 500-MMboe range.

The Ministry of Mines and Energy reported that Colombia’s oil production fell to 851,000 bpd in May 2017, a drop of 6% compared to the same month in 2016, when production was 905,658 bpd. During May 2017, 58,087 fewer barrels were produced, compared to the same period in 2016. And compared to the decreases that were registered between January and May, the volume is lower.

However actual average production in May was 846,200 bpd, which is still above the government’s most recent estimate in the medium-term fiscal framework, which was lowered to 840,000 bpd.

Colombia has 1.67 Bbbl of proven oil reserves, equivalent to 5.1 years of consumption. To ensure adequate production beyond that, the country must invest more in upstream activity, to ensure that supply can at least meet Colombia’s indigenous crude demand.

Brazil. In February 2017, Brazil produced 2.68 MMbopd. This volume represents growth of 14.6%, compared to the same month in 2016. Natural gas production was 106.6 MMcmgd, 9.2% more than produced during the same month in 2016. Combined, total production for the country is approximately 3.35 MMboed. Offshore fields produced 95% of Brazil’s oil and 82% of its natural gas. The country’s output was produced from 8,476 wells, including 821 offshore and 7,655 onshore.

Lula field, in the Bay of Santos, is the country’s largest producing field, on average, with 690,700 bopd and 30.1 MMcmgd. Fields operated by Petrobras produced 94% of Brazil’s oil and natural gas, but Exxon Mobil has expressed an interest in partnering with Petrobras to explore recent deepwater discoveries.

Norwegian producer Statoil plans to more than triple its production in Brazil, and will seek to become operator of the Carcará discovery in the Santos basin, which is one of the world’s largest discoveries. To date, Statoil has invested more than $10 billion to develop the project and, in the process, has become one of Brazil’s largest offshore operators. Carcará is also the largest field that the company operates outside Norway.

Total oil and natural gas production in Brazil reached 3.31 MMboed, according to national agency, ANP. Of that production, 47.5% came from subsalt fields. Finally, Petrobras produced 2.18 MMbopd in May, 4% more than in the previous month.

Venezuela. As the difficult economic situation in Venezuela becomes more complicated, the national government continues to strengthen its partnership with China, the only country willing to make meaningful investments with the corrupt Maduro administration. In June, China agreed to pump approximately $2.8 billion into Venezuela’s infrastructure, to boost oil production up to 325,000 bpd.

The announcement, which was made during a China-Venezuela meeting in Beijing, outlined operational details in the Orinoco Oil Belt, which will be undertaken as part of the Petrozumano and Petrosinovensa JVs. The JVs also will provide for maintenance of 300 wells in the Ayacucho Block.

With this investment, Petrosinovensa production will increase from 165,000 bopd to 230,000 bopd, while the Petrozumano JV will seek to add 15,000 bopd to its current daily rate. Downstream ventures will continue, as planned, with the construction of the Nanhai refinery, a facility that will have the capacity to process 400,000 bpd of extra-heavy crude from the Orinoco Belt.

In July, the joint venture formed between PDVSA and Rosneft began operations in the Orinoco Oil Belt. Perforosven, will serve the other Russian-Venezuelan joint production companies operating in the country, to perform the necessary work on wells, while optimizing costs and increasing efficiency with new technologies.