This week, we are launching IOGP’s Global Energy Brief on Central & South America. Using BP’s Statistical Review, we looked at the region’s demand and supply situation. Then, we calculated what we call the IOGP Production Indicator©, which balances the region’s production with its indigenous demand. A Production Indicator score of 100% or more means a region is self-sufficient; 99% or less requires imports to meet demand.
The idea to do the report came from discussions with some IOGP colleagues about security of oil and gas supply. Most parts of the world use oil and gas to meet their energy demand; oil and gas usually figure among the top three energy sources. So naturally, it makes sense to meet demand using local resources when possible and practical. Doing so provides local jobs and tax revenues and you save long transport routes and the related cost and emissions. The same sort of benefits – but on a much larger scale – as when you choose to buy apples from your local farmers’ market rather than those shipped from halfway around the world.
We also discussed those situations where it would be cheaper to import foreign oil or gas. After all, global trade is a good thing, as students of 18th century ‘comparative advantage’ advocate David Ricardo will attest. For example, the use of LNG as a way to ship gas long distances at comparatively little cost has already improved the global supply situation and will do so even more in the future.
With all of this in mind, and using the BP Statistical Review, we looked at the seven global regions where IOGP members are active and calculated the Production Indicators for Africa, Asia Pacific, Europe, the Middle East, North America, the CIS region and Central & South America. Our regional partners supported us by applying local interpretations of the data. The first report to be published covers Central & South America. I am very grateful for the help of ARPEL, the regional organization that represents 90% of upstream and downstream activities in the region.
Our main findings:
- After decades of growing oil production and self-sufficiency, the region is on the verge of becoming a net importer. The Production Indicator for Central & South American oil is 107%, down from 130% in 2006 and 235% in 1970.
- Oil demand has multiplied by four in the past 40 years; production has also increased, but not that to that extent. For the first time, Brazil is the region’s #1 producer, surpassing Venezuela, which holds the world’s largest oil reserves
- The number of significant gas producing countries in the region has increased significantly since 2000. Whereas at that time only Argentina and Venezuela were important producers, Bolivia, Brazil, Columbia, Peru and Trinidad & Tobago are now all significant contributors to the region’s gas wealth. With a gas demand increased by 80% since 2000, the region’s Production Indicator for gas is down from 115% in 2009 to today 103%, showing the need for further investment.
Putting this material together was an eye-opener for all of us at IOGP. I hope you find the analyses useful as well. The Global Energy Brief on Central & South America is available from our bookstore. Please send comments and proposals to me under om@iogp.org
About Olaf Martins
Olaf is IOGP’s global engagement manager. He has over 25 years’ experience in the industry. Before joining IOGP Olaf was with ExxonMobil, where he held a number of senior public affairs roles, including most recently his position as ExxonMobil Central Europe Holding’s manager of government relations and media. Olaf’s educational background is in economics.
