South America Now “Most Consequential” for New Oil Supply, given Middle East Tensions

• South America’s upcoming oil developments, including several in Guyana, are gaining increased importance due to recent developments in the Middle East, Norway-based Rystad Energy said in an April 21 analysis.
• “The Middle East conflict has done more than spike oil prices, it has exposed how dangerously concentrated global supply chains are around the Strait of Hormuz. South America is now positioned as the world’s most consequential source of incremental supply. The region offers scale, geologic quality and relative political stability at exactly the moment that the world is shopping for alternatives,” said Radhika Bansal, Senior Vice President, Oil and Gas Research.
• Guyana’s next set of offshore projects awaiting approval are set to unlock a key share of new global oil supply, as markets respond to disruptions linked to the Strait of Hormuz, according to Rystad Energy. Across the region, offshore developments in Guyana, Brazil and Suriname were identified as the most immediate sources of new supply.
• The firm said a sustained US$100-per-barrel oil price could unlock up to 2.1 million barrels per day (b/d) of additional crude supply across South America by the mid-2030s, with a large portion tied to projects that have not yet reached final investment decision.
• Rystad Energy said that if these unsanctioned projects are fast-tracked, they could deliver more than one million barrels of oil equivalent per day (boe/d) over the next decade, supported by about US$33.0Bn in greenfield investment through 2035.
• It was noted that the largest gains will come from earlier approvals of new projects, particularly those still awaiting sanction in Guyana’s development queue. The firm also identified limited global shipyard capacity for floating production, storage and offloading vessels as a key constraint that could slow the pace at which new projects are brought online.

(Source: OIL Now)