Export potential remains
Production plateau triggers demand challenges
- Production: A five-year plateau continues
- Demand: A slight decline overall, but Argentina’s demand holds
Export potential reduced
In 2007, total gas exports from Central and South America were 18 billion cubic metres. In 2017, export volumes were down to 5 billion cubic metres.
Total gas production for the region in 2017 was 179 billion cubic metres. The two biggest gas producers, each with a share of about 21%, are Argentina and Venezuela. They are followed by Trinidad & Tobago with 19% and Brazil, which has a 15% share. Bolivia, Colombia and Peru are also significant producers, each with annual volumes of more than 10 billion cubic metres.
Looking at the leading producers, Argentina had a 2017 Production Indicator of 77%, which required the import of almost a quarter of demand. Success in Vaca Muerta will help to fill that gap to the time when Argentina last enjoyed selfsufficiency a decade ago.
Brazil’s Production Indicator in 2017 was lower, at 72%. However, it is on an upward curve regarding gas production versus demand. The 27.5 billion cubic metres it produced was a record for the country. A decade ago, its Production Indicator was 53%.
Venezuela, with a Production Indicator of 100% in 2017, managed to meet its internal demand.
Diminishing demand after all-time highs
Demand for gas in Central and South America was 174 billion cubic metres in 2017 – down 2% from the all-time highs achieved the previous two years.
Argentina is the main source of demand, accounting for 28% of the regional total and marking a new high – 48.5 billion cubic metres – for its gas use. Brazil and Venezuela each used 22% of the region’s gas.
What is left and where
Central and South America has 4.2% of the world’s proven gas reserves. The bulk of these reserves – more than 75% – are Venezuelan.
The future of gas production: progress through investment
If proof were needed for the potential of gas production in the region, Argentina’s Vaca Muerta development is a prime example. Thanks in large part to output from this outstanding shale reservoir, the nation’s gas production has risen by 18% over the past four years – helped by government stimuli. Argentina is now optimistic that Vaca Muerta will not only meet domestic needs but also generate welcome export potential.
In Brazil, gas from offshore operations accounts for around 83% of national production. Production from the pre-salt geological formation reached 50% of total output and was the main driver for Brazil’s higher production.
In contrast, production in Bolivia has dropped 8% in the past four years. This is due to fall in investment, which could restrict the country’s plans for continuing reliable exports to its neighbours and for natural gas industrialization.
Peru is already experiencing the consequences of lower investment. This has resulted in some local gas shortages and led to prioritizing domestic offtake and suspending exports. The number of upstream contracts has halved in the last three years. To its credit, the government is now fostering sector development by developing a new regulatory and legislative framework to make investment in the sector more attractive.
Trinidad & Tobago has a similar objective for the launch of a new upstream licensing round. It aims to foster the country’s energy sector, building on the small increase in upstream activity as natural gas production climbs again – although it is still below historic levels. The country requires additional gas supply to meet demand from petrochemical facilities.
Miguel Moyano, Upstream Director, ARPEL