A new year brings fresh starts and – for investors – a fresh look at opportunities in existing and emerging markets.
2025 holds great promise for the Latin America and the Caribbean Region, the area stretching from Mexico to the Southern Cone whose abundant natural resources, growing population and geological potential are drawing attention from energy professionals worldwide.
“Latin America’s diversity in resources and its strategic importance on the global energy stage offer a stimulating environment for anyone passionate about making a substantive impact in energy,” said Rodrigo Vaz, upstream portfolio alignment lead, Latin America, for S&P Global Commodity Insights.
Based in Rio de Janeiro, Vaz provides strategic guidance to companies working in the LAC region. He finds both his position and assigned area tremendously engaging.
“It’s incredibly fulfilling to collaborate with diverse teams and leverage data-driven insights to guide our clients through the complexities of the energy landscape and influence pivotal decisions that shape the future of a broader energy ecosystem,” he said.
“I appreciate the dynamic nature of our energy sector, where cultural diversity and resilience drive innovation. The region’s potential for growth in both traditional and renewable energy sectors make it an exciting landscape for professionals in the industry,” he said.
High-Impact Investments
Vaz said the LAC region is home to world-class investment opportunities.
“Brazil Pre-Salt and Guyana-Suriname Basins undeniably sit at the forefront due to their significant resource bases and the allure of promising returns and stable operational climate,” he said. “Brazil’s regulatory frameworks have adjusted to attract significant foreign investment, while Guyana’s prolific finds have redefined its economic landscape.”
“Equally captivating is the Vaca Muerta formation in Argentina, which is seeing increasing momentum in unconventional drilling, solidifying its position as the most formidable force in shale outside the United States,” he said.
Vaz noted how, in addition to its proven areas, the region has emerging opportunities for explorationists.
“In the exploration and production realm, reservoir knowledge remains a secret until you have wildcat and appraisal wells drilled to gain knowledge and confirm/define resource potential,” he said. “Latin America remains a principal target for exploration and holds some of the key remaining new frontier areas of interest.”
Most of the region’s exploration hotspots are in the deepwater and include the Atlantic Margin areas in Guyana and Suriname, the Equatorial Margin in Brazil, the Pelotas Basin in Brazil and Uruguay, the Argentine Basin in Argentina and the Colombian Caribbean.
A Clear Target for Exploration
Vaz’s faith in the regional market is supported by the data.
“In the global context, the one region that has become a clear target for exploration is Latin America and the Caribbean,” he said.
He described how, between 2020 and 2023, 39 percent of the 56 billion barrels of oil equivalent of recoverable resources discovered worldwide were discovered in the region.
“Nearly two thirds of the discoveries from came from Brazil and Guyana. Suriname, Mexico and Colombia contributed another 28 percent, with other countries like Bolivia, Trinidad and Tobago, Argentina, Chile, Cuba and Ecuador rounding it out,” he said.
Contractual incentives help to make these discoveries possible, and Brazil sets an example for how to make that possible.
“Brazil boasts the largest inventory of upstream bidding blocks in the world with approximately 1,300 blocks,” he said. “Investors have access to these blocks under the country’s open-door permanent offer bidding system, the sole mechanism for licensing upstream acreage since 2022.”
Another motivating factor for investors is the proximity of frontier basins to basins with proven success.
“Upstream investors are increasingly targeting two main offshore areas: the Equatorial Margin basins, close to exploration hotspots Guyana and Suriname, and the Pelotas Basin, which is located on the border with Uruguay and shares analogous subsurface features with Namibia’s Orange Sub-basin,” he said.
AAPG Energy Summit
Sessions highlighting recent activity exploration opportunities in the Equatorial Margins and South Atlantic were key features of the AAPG Energy Summit held in Punta del Este, Uruguay in November.
The massive Graff and Venus discoveries in Namibia in 2022 have drawn renewed interest in Uruguay, as well as offshore areas of neighboring Argentina and Southern Brazil. The first AAPG event in the country highlighted the strategic importance of conjugate margins on both sides of the Atlantic and featured strategic panels and business-to-business sessions designed for decision makers working in both oil and gas and renewable energy sectors.
The Energy Summit attracted executives from 81 organizations and 15 countries and was hosted by ANCAP, Uruguay’s national oil company, with support from the Society for Low Carbon Technologies and Association of Oil, Gas and Renewable Energy Companies of Latin America and the Caribbean (ARPEL).
Agency-Industry Roundtable
The Energy Summit included several pre-event activities, including the Agency-Industry Roundtable, a private forum designed to share insights and facilitate discussion around the region’s evolving fiscal and regulatory E&P landscape with executives from operators and regulatory agencies.
The roundtable was organized by ARPEL with support from AAPG and ANCAP. Vaz, who has been serving as an ARPEL board member since 2015, co-moderated the session with Executive Secretary Carlos Garibaldi.
Vaz said he appreciated the opportunity to interact with Garibaldi and the top executives who represented regulatory agencies and companies from Argentina, Brazil, Colombia, France, Peru, Saudi Arabia, the United States and Uruguay.
“Given the region’s critical juncture in balancing economic and population growth, with energy affordability, security and sustainability, it is always valuable to engage in dialogue with main stakeholders to promote collaborative efforts for sustainable regional development,” he said.
Keys to a Competitive E&P Sector
The Industry-Agency Roundtable centered upon five key factors shaping countries’ E&P competitiveness:
- Investor confidence: The assurance of investments being governed by transparent and stable rules is paramount. Investors seek environments where regulatory frameworks are predictable, thereby minimizing uncertainties that could jeopardize their financial commitments.
- Pace of development: In an era marked by environmental, social and governance concerns and inflationary pressures, the speed of development is crucial. Rapid project execution not only maximizes revenue but also counters external pressures that could impede progress.
- Risk management: Companies must adeptly evaluate their risk tolerance and manage downside risks. This involves a strategic approach to resource management that ensures resilience against unforeseen challenges.
- Fair share: It is essential for host countries to secure a fair share of revenues from their oil and gas resources. This balance fosters a collaborative relationship between governments and investors, aligning interests for mutual benefit.
- Competitiveness: Maintaining a competitive edge is vital for attracting investments and ensuring sustained success. Countries that offer favorable conditions for E&P activities are more likely to draw long-term commitments from international players.
Technical versus Above-Ground Risk
The roundtable also included a discussion around above-ground competitiveness for E&P and a review of S&P Global’s proprietary Oil and Gas Risk rankings.
“Above-ground risks, encompassing political, regulatory and socio-economic factors, are pivotal and often eclipse technical challenges in shaping investment decisions,” Vaz said. “Companies prudently weigh these considerations heavily, seeking out jurisdictions marked by a set of factors, which often hold more sway than the technical complexities inherent in oil and gas operations.”
He noted how, while technical risks related to geological and engineering challenges are significant, they are quantifiable and manageable through technological advancements. In contrast, above-ground risks can introduce a level of unpredictability that fundamentally alters project feasibility.
“LAC countries that provide political and contractual stability have marked advantages over countries with similar geological potential,” Vaz said.
Roundtable participants discussed how contractual and political stability can provide an advantage for the American side of the conjugate margins, who share similar geological characteristics and hydrocarbon potential with countries on the African side.
The S&P report concluded that the margin’s upstream hotspots generally share common features: geological prospectivity, political support for E&P and state capacity to attract investment and advance operations. Broadly, the countries on both sides of the margin in the early stages of E&P are the most attractive, while maturing producers pose higher risks.
“We see the risks on average are generally slightly higher in African Margin countries than those in South America, where we have Uruguay and Guyana with the lowest risk score (highest attractiveness for foreign investors) while Venezuela lag behind as one of the lowest attractive for investment,” Vaz said.
He noted how companies place considerable emphasis on understanding and mitigating above-ground risks, as these factors can profoundly impact the stability and profitability of their operations.
“By aligning with the five factors of E&P success listed above, countries can create an environment that not only attracts investment but also fosters sustainable development in the energy sector,” he said.
Participant Reactions
Vaz described the response to the Agency-Industry Roundtable in Punta del Este as “markedly positive,” as evidenced by the dynamic discussions and insightful follow-up queries received from attendees after the meeting.
The president of Colombia’s National Hydrocarbon Agency (ANH) attended the session in Punta del Este and invited Vaz and Garibaldi to share the findings at the ANH Congress in Cartagena in December.
“The data-centric approach sparked meaningful discussions, converging to a shared understanding of the challenges and opportunities that lie ahead for the region,” he said.
“Such gatherings are essential for bridging the gap and for fostering an ecosystem of collaboration and knowledge exchange between policymakers, industry leaders, and technical experts. They bridge gaps, align interests and facilitate the development of policies that not only encourage investment but also support sustainable and innovative energy practices,” he added.
Advice for Countries Seeking Investment
Vaz noted said LAC countries wishing to attract new investors must prioritize transparency in their regulatory frameworks and offer enticing fiscal incentives that balance risk with opportunity.
“It’s crucial to cultivate dialogues with international stakeholders to tailor policies that harmonize with global industry standards while addressing local socio-economic needs,” he said.
The economic case for changing terms and conditions, however, hinges to a considerable extent on country specifics, notably the scale and maturity of hydrocarbon resources, the importance of the sector to the economy and the investor mix.
Cyclical commodity and economic cycles add further complexity to the quest to maximize state benefits without impairing investment.
“As always, host governments wish to maximize value, with tighter fiscal terms to boost immediate revenue and changes in other terms to ensure adequate investment into the future project pipeline to develop its remaining resources, a delicate balancing act that can elude government planners, creating the need for further adjustments in time,” he said.
Advice for Potential Investors
Likewise, Vaz also has advice for companies interested in entering the region.
“Companies venturing into Latin America for the first time should immerse themselves in comprehensive market research to grasp the intricate local and regional market landscape. Building relationships with key stakeholders and fostering partnerships with local firms can mitigate entry risks and facilitate smoother operations,” he said.
“It’s also vital to approach entry with an adaptability mindset—being prepared for regulatory shifts and cultural nuances that define each unique market.”