South America is poised to become a critical anchor in the global oil supply chain, and if you thought OPEC controlled everything, think again! The region's burgeoning oil production, especially from offshore Brazil, Guyana, and Suriname, coupled with Argentina's Vaca Muerta shale, is set to deliver cost-competitive oil barrels well into 2030. This is happening against a backdrop of consistently high global oil demand. But here's where it gets controversial... Many analysts predict a decline in oil demand. Let's explore how South America fits into this complex energy landscape.
Global oil demand is projected to remain robust throughout the 2030s, putting immense pressure on existing oil fields to maintain their output. Rystad Energy forecasts that global demand for liquid fuels will peak in the early 2030s at approximately 107 million barrels per day (bpd). Even after this peak, demand is expected to stay above 100 million bpd through the 2040s, before gradually declining to around 75 million bpd by 2050. Non-OPEC+ nations will be essential to balancing the oil market, with South America taking center stage. The region's ability to deliver cost-effective oil, even when prices are low, will be crucial in offsetting the anticipated slowdown in US shale oil growth. And this is the part most people miss: South America's deepwater expertise gives it a unique competitive advantage.
Currently producing oil wells are anticipated to yield less than half of their current output by 2030. This highlights the urgent need for continued investment in both developing new oil fields and enhancing existing ones. While bringing additional oil volumes online is possible, undeveloped and newly discovered fields will be vital sources of supply through the mid-2030s. Although the market might experience a brief period of oversupply, potential risks – and there are many, from political instability to logistical bottlenecks – could easily delay project timelines. South America is uniquely positioned to offer competitive oil supplies to the global market, largely due to its demonstrated success with deepwater oil projects. Looking ahead, continued investment and an even stronger focus on deepwater expansion will be necessary, particularly as the supply gap is expected to widen after the mid-2030s.
According to Radhika Bansal, Vice President of Upstream Research at Rystad Energy, approximately 60% of the conventional oil volumes currently under development or already discovered – nearly 5.9 million bpd – are expected to come from non-OPEC+ producers by 2030. South America is predicted to lead supply growth this year, adding over 560,000 bpd of crude oil and condensate. North America is expected to follow, adding around 480,000 bpd. By 2026, South America's oil additions are projected to exceed 750,000 bpd, positioning the region as one of the few globally with additions exceeding 500,000 bpd, alongside the Middle East (outside of OPEC+). This growth will be a key driver for overall non-OPEC+ expansion.
Offshore oilfields that have commenced production since 2020, along with those slated to begin production by 2030, are expected to account for over 65% of South America's conventional oil production. This substantial growth is fueled by the increasing deployment of floating production, storage, and offloading (FPSO) vessels, primarily driven by developments in Brazil and Guyana. In Guyana, ExxonMobil has made significant strides in developing multiple discoveries, with four FPSOs already in operation, demonstrating effective project execution. However, the rate of new oil discoveries has slowed, with approximately 420 million barrels of liquids discovered over the past year – the lowest level since 2017. This underscores the ongoing need for continued exploration efforts. Rystad Energy's base-case projections indicate that oil demand is expected to outpace current supply by the mid-2030s, further emphasizing the need for renewed exploration and enhanced recovery methods. South America is strategically positioned to play a key role in addressing this future supply gap.
The region's future success will also heavily depend on sanctioning new oil projects. South America is expected to maintain strong final investment decision (FID) momentum through 2030, resulting in a cumulative conventional greenfield capital expenditure (capex) for oilfields between 2020 and 2030 of $197 billion. This investment will be largely concentrated in offshore deepwater projects. While Brazil and Guyana account for the majority of these investments, Suriname's $10.5 billion GranMorgu field (formerly Sapakara South and Krabdagu) is scheduled to come online by 2028.
Total upstream investment in South American oilfields surpassed $46 billion last year, marking the highest level since 2015. Investments are projected to grow by 10% this year before slightly tapering off in the following years, remaining close to $50 billion throughout the next decade. Greenfield investments will be primarily driven by Brazil and Guyana's yet-to-produce assets, while already producing fields in Argentina, Brazil, and Colombia will fuel brownfield spending.
South America's upstream oil sector plays a pivotal role in the global energy landscape, having contributed significantly to conventional production and new discoveries over the past decade. The region has consistently driven net oil exports and is poised to remain crucial in the years ahead, with Argentina, Guyana, Suriname, and Venezuela leading the charge. Brazil, Colombia, and Ecuador are also expected to sustain meaningful export contributions, at least through the mid-2030s. With adequate investment in exploration, there remains considerable upside potential, as new discoveries could unlock future oil volumes and enhance recoverable resources from existing fields.
Two countries that may be flying under the radar, but show promising potential, are Trinidad and Tobago and Peru. ExxonMobil has strategically re-entered Trinidad and Tobago, one of the Caribbean's least-explored ultra-deepwater frontiers, through a new production-sharing contract (PSC). Leveraging a similar exploration approach that identified over 13 billion barrels of recoverable resources in Guyana's Stabroek Block, ExxonMobil aims to replicate this success. If new discoveries are made, the company could invest more than $20 billion, signaling continued interest in frontier deepwater exploration. Now, some argue that focusing on new oil exploration contradicts global climate goals. Where do you stand on this issue?
In Peru, offshore northern basins are emerging as a promising exploration area. A consortium comprising Chevron, Anadarko (Occidental Petroleum), and Westlawn has recently partnered to explore three offshore blocks – Z-61, Z-62, and Z-63 – in the Mar de Grau, off the coast of northern La Libertad. Successful exploration could add significant new oil reserves, where a commercial discovery could yield between 100,000 and 150,000 barrels per day in peak production. What innovative technologies or strategies do you think are most critical for maximizing oil recovery and minimizing environmental impact in these South American projects? Share your thoughts in the comments below!
