Global energy corporations are heading to South America in search of oil. This is seen as an effort to find alternatives as the Middle East, a major global oil-producing region, frequently becomes embroiled in geopolitical conflicts.
On the 7th (local time), The Wall Street Journal (WSJ) reported, "South American oil fields are booming," stating that "Brazil, Guyana, and Argentina are expected to drive more than 80% of the global oil production increase occurring outside the OPEC (Organization of the Petroleum Exporting Countries) block in the next five years."
ExxonMobil and Chevron, global energy corporations, are currently investing in the Equatorial coastal region of the Foz do Amazonas (Amazon River estuary), the most promising offshore development area in Brazil. Last year, ExxonMobil secured equity in 10 blocks within the Foz do Amazonas Basin in partnership with Petrobras, the Brazilian state-owned oil company and one of the largest companies in Latin America.
French oil company Total is advancing a $10.5 billion (approximately 14 trillion won) oil field development project off the coast of Suriname. In addition, global energy corporations such as APA Corporation, headquartered in Houston, U.S., and Malaysia's Petronas are also investing in oil field development in Suriname. Energy research firm Rystad estimates that investment in Suriname's upstream oil and gas sector (exploration and development) will reach approximately $9.5 billion (about 13 trillion won) by 2027.
The reason energy corporations are heading to South America en masse is due to the discovery of large oil fields in the region in recent years. Argentina's oil production has reached 3 million barrels per day, the highest level in the past 20 years. Guyana is estimated to have more than 11 billion barrels of oil buried, and with the increase in oil drilling, it is on the verge of becoming the world's largest oil producer based on per capita oil production.
Particularly, the U.S. has become the largest oil producer in the world, recently surpassing Saudi Arabia through aggressive oil development, but the main shale oil regions from West Texas to North Dakota are gradually depleting, and the production quality of the remaining oil drilling sites is declining, necessitating alternatives. In this situation, geographically close South America has emerged as a good alternative for U.S. energy corporations.
South America also features fewer geopolitical risks compared to the Middle East. Iran, which holds the fourth-largest oil reserves in the world, engaged in armed conflict with Israel last month, while Russia, the eighth-largest oil reserve holder, has faced disruptions in its oil exports due to Western sanctions following the invasion of Ukraine in 2022. Conflicts frequently arise in the Middle East, causing disruptions to oil exports and fluctuations in international oil prices.
The productivity of South American crude oil is also remarkable. According to WSJ, South American crude oil has lower production costs than the global average and emits relatively lower carbon. Brazilian crude oil is regarded as having relatively fewer impurities. Guyana's high-quality oil fields are located in shallow areas, making the breakeven point low for corporations seeking to develop oil fields, at around $25 to $35 per barrel.
Francisco Monaldi, head of the Latin America Energy Program at the Baker Institute at Rice University in Texas, noted, "Guyana is experiencing remarkable growth as an emerging oil producer," adding that "it will become the country with the highest per capita oil production in the world in the future."