Natural gas is emerging as a key driver for Latin American energy development
The monetization of natural gas reserves in Latin America does not only lie in its export to other markets; the continent itself emerges as a priority destination in which energy can be a driver of integration and development. The reserve potential and the intraregional demand provide a space for new opportunities.
"Think globally, act locally," the Secretary General of the International Gas Union (IGU), Luis Bertran, said in this regard during the closing day of the ARPEL Conference 2017 organized by the Regional Association of Oil, Gas and Biofuels Sector Companies in Latin America and the Caribbean (ARPEL), which was held in Punta del Este, Uruguay.
For the IGU representative, the continent has an important energy mix that positions gas as an energy of transition between fossil fuels and renewable energy. In addition, gas not only contributes to decarbonization of the environment, but also enables greater access to and democratization of energy. At present, the wealth of Latin America and the Caribbean is linked to gas in both conventional and unconventional resources, whether on land or in deep water.
On the other hand, José de Sá, Partner at Bain & Company Brazil, stated that, taking advantage of the history of integration in energy existing in other regions, Latin America must intensify the penetration of gas into its own energy matrix, so that there is true balance of supply and demand and a robust, homogeneous and connected market consolidates. "Much progress needs yet to be made, but that would be true integration," he said.
In this context, liquefied natural gas (LNG) would be consolidated with a decisive role for integration. Chile, Argentina and Brazil, currently importers of LGN in the region, and the installation of floating storage and regasification plants increase the possibility of influencing the regional energy matrix more strongly, according to Sá.
As part of the session regarding the future of refining and petrochemical industry, Marcos Sabelli, President of the Latin American Petrochemical and Chemical Association (APLA), presented a scheme in which the region also has an important opportunity to monetize natural gas liquids through their industrialization.
According to the expert, Latin America has the elements that make up the basis of the petrochemical industry: raw material, a demanding market and the ability to build a plant on a global scale. "This is a huge opportunity," he said.
At present, 96 % of manufactured products at the global level include inputs of the chemical and petrochemical industry, so it is considered as the basis of modern life and future development. "Every day we surround ourselves with petrochemicals," Sabelli added.
Daniel Monzón, Partner of the consulting firm Arthur D. Little, considered that another factor to take into account is that Latin America has relative high rates of growth. "It grows more than the world average in both refined products and petrochemicals," he said.
However, regional petrochemical consumption remains low in relation to other regions, according to Sabelli. "We consume a quarter of what the United States consumes," he stated. In 2015 continental petrochemical imports exceeded US$ 100 billion, while exports only reached US$ 35 billion.
This gap could be reduced with the development of projects such as Vaca Muerta, said the President of APLA, who considers that, at the present time, with only 1 % of the surface under development, production of shale oil and shale gas has already surpassed two digits in the total production of the Neuquén basin. This unconventional potential could help to replicate, at the regional level, petrochemical industrialization that stimulated the American economy in recent years.
The last day was supplemented with a session dedicated to the strategic importance of having an effective industrial cybersecurity program. Brian O'Durnin, Information Security Manager of YPF, made clear that the current challenge is the inclusion of industrial cybersecurity in the agenda of the senior management of companies in the sector.
Andrey Suvorov, Director of Critical Infrastructure and Business Development of Kaspersky Lab, recalled that cyberattacks on industrial assets are already considered by the World Economic Forum as part of the most significant risks today; and Maximilian Kon, Managing Director of WisePlant, emphasized that good security is good business. "A leading company considers security as an investment and not as a cost," he said.
The leader of the future has to have a great power of listening, inspiring, and being able to build bridges between the personal and the corporate purpose; this was one of the main concepts discussed in the plenary session devoted to the "work force of the future." Experts in this field said, “The diversity of ideas for a collective construction is much more powerful than the individual contribution," and they stressed the importance of "being curious, unlearn and relearn new ways to generate new neuronal connections that allow us to reach our full potential."
In the closing ceremony, the Chairman of the Board of Directors of ARPEL, Carlos Colo, stressed: "The opportunities for the region are enhanced in a context where energy demand will continue to grow and hydrocarbon leadership in the global energy mix will remain in force." He then added: "After a period of adjustment of prices, the oil and gas sector intensifies the search for greater efficiency and competitiveness."
Finally, the President of ANCAP, Marta Jara, thanked the participants and panelists and noted, "We have a great role to play to contribute to well-being and progress."
The Oil and Gas Conference ARPEL 2017 "New energy reality, challenges and opportunities", was held April 25 - 27 in Punta del Este, Uruguay. This event was organized by the Regional Association of Oil, Gas and Biofuels Sector Companies in Latin America and the Caribbean, an institution with more than 50 years of history. At present, its membership represents over 90% of the upstream and downstream activities in the region.