Latin America has competitive advantages to meet the growing global demand for energy

  • With an international oil price of around US$ 50 per barrel, the oil and gas industry in Latin America and the Caribbean responds to a new energy reality. After a period of adjustment, now the sector explores in depth the search for greater efficiency and competitiveness, the attraction of new investments and the mitigation of the effects of global climate change.

    During the second day of the ARPEL Oil and Gas Conference 2017, organized by the Regional Association of Oil, Gas and Biofuels Sector Companies in Latin America and the Caribbean, the most important leaders of the regional energy sector gathered at Punta del Este, Uruguay, agreed that the energy wealth of the continent is a competitive advantage to meet the growing global demand.

    At his conference related to the geopolitical moment and its impact in the energy sector, Gustavo Nieponice, Partner and Managing Director of Boston Consulting Group, stated that the growth of the global demand for oil and gas will be mainly driven by emerging markets.

    However, the excess supply of hydrocarbons at the global level and its impact on the international price of crude oil and gas will continue to maintain prices by US$ 60 at least in the following years. "Prices will be fairly low until 2020. If you are a consumer, it is good news. If you are a producer, it is a challenge," stated the Senior Vice President of IHS Markit, Carlos Pascual.

    With prices that have forced a reduction of costs and greater efficiency, competitiveness is present. "Competitiveness cannot be ignored, it must be respected both by private companies and by States," Pascual said.

    The executive officer of IHS Markit was responsible for leading the Panel of Chairmen and CEOs of the Region, where important representatives of companies such as Schlumberger, ENAP and Tecpetrol, among others, agreed to indicate that companies are working in a market where the cycles have become shorter.

    "We are currently working on a horizon with a range of US$ 55 per barrel, and this is our basis to plan investments,” said the President of Tecpetrol, Carlos Ormachea, and he stated that in Argentina there are conditions to invest in unconventional gas projects, but, at this moment, the current prices make the margins remain very tight. "Vaca Muerta must be able to develop at market prices," he emphasized.

    To deal with the adjustments, the Vice President of Marketing for Latin America of Schlumberger, Carlos Sarmiento, said that the most appropriate means to generate improvements in costs and efficiencies in a more sustainable manner is the integration of efforts between operators and service companies.

    Referring to the same issue, Marcelo Tokman, General Manager of the Chilean company ENAP, added technology and innovation as determining factors to achieve efficiency. "We must seek to move faster in the learning curve, to achieve innovation and improve processes. These are the elements that will incorporate sustainability to the reduction of costs," he said.

    However, not everything is efficiency and cost reduction. The speakers consider that climate change is a major challenge, where natural gas appears as a player that could link hydrocarbons to renewable energies.

    Authorities of the energy area of Brazil, Uruguay, Paraguay and Colombia also contributed to the Conference ARPEL 2017, in addition to the Executive Secretary of the Latin American Energy Organization (OLADE), Alfonso Blanco, who launched the Panel of Ministers of Energy of the Region and stressed the need for Latin America and the Caribbean to achieve energy complementarity as a preliminary step to integration.

    Carolina Cosse, Minister of Industry, Energy and Mining of Uruguay, highlighted the achievements in the composition of the energy matrix of her country, doubling the installed power and reaching levels of energy equity and security that are considerable at the international level.

    In this regard, the National Director of Energy of Uruguay, Olga Otegui, added that one of the most important strategies of her country for the development of the energy sector is linked to the complementarity of renewable sources with natural gas, and that this was the origin of the project to install a regasification terminal. "We believe that natural gas would be the most efficient source, adaptable to different uses, not only thermal or electric but also industrial," she said. This is in addition to maritime exploration, which, according to Otegui, enables moving forward to a Round III to positioning Uruguay in the oil map.

    The Deputy Minister of Mines and Energy of Paraguay, Mauritius Bejarano Martí, noted that the hydrocarbon market is being promoted to achieve new findings, with the purpose of reaching a rate of 12 % in the energy matrix in the next 10 years.

    The President of the ANH of Colombia, Orlando Velandia, valued the important oil potentials of his country that, because of the fiscal efforts made, can reactivate exploration more strongly. "I believe that our future is in the Caribbean Sea in the development of offshore exploration," he said.

    Marcio Félix Carvalho, Secretary of Petroleum, Natural Gas and Biofuels, Ministry of Mines and Energy of Brazil, noted that his country adds four decades of development of biofuels, primarily ethanol and biodiesel, while at the same time, it is working in the program "Gas to grow", which encourages the discovery of natural gas in pre-salt fields.

    ARPEL Oil and Gas Conference 2017 is an event organized by the Regional Association of Oil, Gas and Biofuels Sector Companies in Latin America and the Caribbean. In its fifth edition, the motto of the event was "New Energy Reality, Challenges and Opportunities."

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