The outlook for South America’s offshore oil and gas production is on track to surpass volumes from North America by 2024 despite the effects of COVID-19 on global demand and supply.
While several projects in Brazil and Guyana are less likely to be postponed or suspended, offshore projects in US and Mexico tell a different story.
Key projects in offshore US have already been delayed as a result of COVID-19 and there has been a sharp decline in Mexico producing shallow water projects.
Effuah Alleyne, senior analyst at GlobalData, said: “Delays and pending approvals will not help North America reverse its declining trajectory, as production is expected to drop by 15% over a period of 2022-24.
“Improving the region’s trend will require a combination of factors not exclusive to better market pricing to support project economics, enhanced recovery for existing projects and the expansion of resource base especially in Mexico. In addition, projects in the US and Canada have been bottlenecked by pipeline capacity and so increasing pipeline infrastructure will alleviate some of the issues faced.”
Largely due to the positive trend in South America, total offshore production for the Americas as a whole is expected to steadily increase from 8.65 million barrels of oil equivalent per day (mmboed) in 2020 to 9.15 mmboed by 2024.
Alleyne added: “Brazil’s prolific pre-salt region is surviving the industry downturn mainly due to the robust economics of its current and upcoming projects - a result of high productivity, high-quality crude wells.
“In addition, national oil company Petróleo Brasileiro has steadily streamlined its portfolio to focus on exploration and production activities in the pre-salt layer, while divesting non-core assets in onshore, shallow water and post-salt areas.”
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