Latin America Oil Supply in September 2014

Latin America’s oil production is projected to average 4.94 mb/d in 2014, an increase of 0.16 mb/d over 2013 and an upward revision of 10 tb/d from the previous month. The revision made Latin America the second top non-OPEC producing region after North America. Brazil is expected to support this growth, while other main countries in this region are expected to decline in 2014, and Latin America Others will remain steady. On a quarterly basis, total supply in Latin America is seen to average 4.84 mb/d, 4.90 mb/d, 4.97 mb/d and 5.05 mb/d, respectively.

Argentina’s oil supply is expected to decline by 10 tb/d in 2014 to average 0.66 mb/d, steady from the previous MOMR. Argentina’s supply continued to be stable despite a lack of new production as per preliminary data. After the signing of an agreement between Argentina and Petronas of Malaysia to jointly produce oil from the Vaca Muerta shale formation in Argentina, a pilot programme is expected to start in 1Q15 and will involve the drilling of 30 wells. The agreement follows other high-profile international deals to develop the Vaca Muerta site, which has emerged as the most commercially advanced shale play outside of North America.

Colombia’s supply is expected to average 1.0 mb/d in 2014, representing a decline of 30 tb/d, unchanged from the previous month. Preliminary data indicates that Colombia’s oil supply averaged more than 1.0 mb/d during 1H14, a minor decline of 15 tb/d compared with the same period one year earlier, partly due to pipeline damage caused by security issues. Accordingly, the risk remains that the security situation could continue to impact supply in the coming period.

Brazil’s liquids supply is forecast to grow by 0.2 mb/d in 2014 and average 2.84 mb/d, indicating a minor upward revision of 10 tb/d from the previous MOMR. The revision was introduced partly to adjust for updated production data in 2Q14, which turned out to be higher than expected. Brazil’s oil supply increased by 0.14 mb/d in 1H14 compared with the same period one year ago, and output is expected to increase by more than 0.17 mb/d in 2H14.

The newly built Cidade de Mangaratiba floating production, storage, and offloading (FPSO) vessel from the BrasFels shipyard in Angra dos Reis, Brazil will be transported to the Iracema South area of the Lula field in the presalt layer of the Santos basin, connecting it to eight production and eight injection wells with a production capacity of 150 tb/d of oil. Oil production from the Cidade de Mangaratiba vessel is set to begin in 4Q14. Petrobras last year reported plans to increase net production from its offshore pre-salt formation in the Campos and Santos to more than 2 mb/d of oil by 2020. On a quarterly basis, Brazil’s oil supply is seen to stand at 2.71 mb/d, 2.82 mb/d, 2.90 mb/d and 2.95 mb/d, respectively.