Wood Mackenzie: Latin America’s natural gas deficit to grow as new resource production remains a challenge

According to the report ‘Natural Gas Resources in Latin America,’ Wood Mackenzie predicts that natural gas demand in the region will increase an average of 1.4% per year over the next decade, stabilising around 25 billion cubic feet per day (bcfd). With gas supply expected to decline at a rate of 5.6% in that timeframe, the region will face challenges.

“We forecast that supply will be unable to close the gap with increased demand,” said Adrian Lara, Principal Research Analyst, Latin America upstream oil and gas for Wood Mackenzie. “This could potentially be mitigated with new gas developments or yet-to-find resources, but there are significant challenges with infrastructure restrictions and unfavourable exploration incentives. The likely result will be a steady increase of imports in the region.”

With the region’s growing natural gas deficit, imports could range between 7 to 12 bcfd by 2035 to meet demand. In 2022, net imports were 4.9 bcfd and Wood Mackenzie’s 2023 forecast projects 5.2 bcfd.

Countries in the mid-continent will be most challenged with gas integration, while countries like Argentina, with its strong reserves, may find opportunities to supply neighbouring countries.

Lara said: “Colombia’s gas production needs to offset declines of at least 300 million cubic feet per day by 2030 or else it will require a higher level of gas imports. Venezuela has a significant amount of undeveloped gas resources in the Mariscal Sucre offshore assets, estimated at 13.6 trillion cubic feet (tcf), and some of which could be jointly developed with Trinidad and Tobago. Peru also has discovered undeveloped resources in the Camisea region accounting for approximately 3.7 tcf. The question remains which of these resources can become more attractive to operators, and whether the infrastructure and market restrictions can be overcome in a timely manner.”

Contingent resources are equal to 80% of remaining reserves in Latin America.

“As many countries shift away from oil and coal in favour of gas to support the energy transition, demand will continue to grow in the next decade,” said Lara. “For Latin America countries, the challenge will be meeting this demand while their own production declines.”

Read the article online at: https://www.oilfieldtechnology.com/drilling-and-production/04052023/wood-mackenzie-latin-americas-natural-gas-deficit-to-grow-as-new-resource-production-remains-a-challenge/