Latin America, with its abundant oil reserves and relative political stability, remains an attractive market for oil production. The upcoming year will see four countries host bidding rounds for exploration and production (E&P) in oil and gas: Brazil, Mexico, Peru, and Uruguay.
The most momentous of these rounds will be held in Mexico, where the energy sector will be opened to private development for the first time in seven decades, and where development of deepwater offshore and shale near the U.S.-Mexican border offers tremendous possibilities for development. Brazil, one of the region's largest oil producers, will also offer exploration opportunities both onshore, and in the post-salt blocks offshore in its southern fields. Additionally in 2015, Peru will offer development blocks onshore in the Amazon, and Uruguay will hold its third round for exploration.
Due to falling oil prices - WTI hit $63 dollars per barrel as this report is published, a decline of 40% from the year's high - enthusiasm in the industry has dropped somewhat, and budgets for exploration and production (E&P) may be on the decline. This has led to a few delays in Latin American countries announcing the terms for their rounds next year, but it has not led to any cancellations.
Oil drilling is not a short-term business. From exploration to production, new wells can take a decade to be show results. "Oil price volatility is part of the oil business and is factored into the fiscal terms of the contracts. Moreover, blocks awarded in 2015 will not be producing for at least a few years and it's impossible to predict where oil prices will be then," says the Inter-American Dialogue's Energy Program Director Lisa Viscidi. This means that where there are opportunities, oil companies are still bound to go.
Each round offers different opportunities, resources, and of course risks unique to each market.