South America has become a crucial driver of global crude oil supply growth as production stagnates in other regions. Brazil, Guyana, and Argentina are leading this surge, with Venezuela also showing recent recovery.
Brazil saw a 7% increase in crude and condensate output from April to June, ending a five-month decline. Despite a slowdown in Guyana’s rapid growth due to maintenance in the third quarter, Argentina’s shale oil production is set to rise through this year and next. The Vaca Muerta shale play continues to expand significantly.
Colombia is projected to have a strong third quarter with an average production of 797,000 barrels per day (bpd), up by 12,000 bpd from the previous quarter. However, its output is expected to decline starting in the fourth quarter and into 2025 due to falling production from mature fields.
Brazil’s crude output, which had been declining due to maintenance issues, has been recovering. By May, Brazil’s production had risen to nearly 3.33 million bpd, a month-on-month increase of 132,000 bpd. In June, output climbed to 3.41 million bpd, with a further increase expected in July to 3.52 million bpd. Rystad Energy forecasts Brazil’s production will reach 3.76 million bpd by the end of 2024. The growth is driven by increased production from key fields such as Tupi, Buzios, and Mero, which are set to grow by nearly 240,000 bpd in the third quarter. Significant increases were also seen in the Marlim and Marlim Leste fields.
Looking ahead to 2025, Brazil’s production is expected to rise by nearly 400,000 bpd to over 3.9 million bpd, thanks to new projects including Mero 3, Buzios 7, and Bacalhau Phase 1. The startup of these projects has been slightly delayed, with Mero 3 now expected in November and the FPSO Maria Quiteria in December 2024.
Brazilian crude exports remained steady at around 1.5 million bpd in July, a level unchanged since May. China remains the largest consumer of Brazilian crude, importing almost 690,000 bpd in July, which constitutes about 45% of Brazil’s total exports. Despite lower production levels since December 2023, exports are expected to increase as production recovers.
Venezuela is projected to produce 932,000 bpd of crude oil this month, a modest increase from July. The country’s crude output has been rising gradually since the easing of sanctions in late 2023, despite a reimposition of some restrictions in April 2024. Venezuela’s production is expected to grow by 126,000 bpd in 2024 and 62,000 bpd in 2025. However, recent data indicates a slight downward revision in forecasts, particularly for the Urdaneta Oeste asset, which underperformed compared to earlier targets. Venezuela’s exports fell by over 230,000 bpd in July due to reduced exports to China and operational issues, averaging just 340,000 bpd.
Guyana’s production is expected to average around 520,000 bpd in August, a significant increase from July’s 400,000 bpd but below the first-half average of 626,000 bpd. Production was temporarily halted in July for maintenance related to the Gas-to-Energy project, which aims to use gas for power generation. Output from the Liza field is expected to return to normal by September, with a projected average of 593,000 bpd for 2024. The addition of the FPSO One Guyana at the Yellowtail field in late 2025 is anticipated to boost production further.
Argentina continues to drive significant growth in Latin America. The country’s production grew by over 7% year-on-year in the second quarter of 2024, averaging 691,000 bpd. Argentina is expected to see strong production growth of 8% in 2024 and 13% in 2025. The Vaca Muerta shale play remains a major contributor, with over half of the country’s output coming from this region. Shale production, which accounts for 56% of the current output, is growing at over 14% year-on-year.
In summary, South America is increasingly pivotal in global crude oil supply, with notable contributions from Brazil, Guyana, and Argentina, while Venezuela also shows signs of recovery despite recent challenges.