One of the most obvious effects of the fall in oil prices is the lower level of exploration seen in the last two years. Latin America is no exception to this global trend. With investment budgets declining, the focus of oil companies in the region seems to be limited to opportunities arising from the opening up of the sector in Mexico and expectations regarding a change in conditions in Brazil.

However, even in this scenario, interest in the so-called frontier areas, where the presence of significant petroleum reserves has not been demonstrated, has not declined.

"We're at a time when oil companies are looking very carefully at the terms of each project," says Lisa Viscidi, director of the Energy, Climate Change and Extractive Industries program at the Inter-American Dialogue. "If companies see there are good terms, they're willing to explore new frontier areas despite having less known and perhaps smaller resources."

Hence the attractiveness of offshore areas in Uruguay and Cuba, the potential of Guyana's oil fields and expectations regarding the unexplored areas of Paraguay bordering producing areas in Brazil, Bolivia and Argentina. The geological potential in these areas, coupled with attractive contractual frameworks for investment given the need to reduce their imports of oil and gas, are magnets attracting both large oil companies and juniors. However, expectations could fade rapidly if the initial results of exploration are not positive.

In this report we analyze developments in the hydrocarbons industry in Uruguay, Cuba, Guyana and Paraguay in recent years. In addition, we identify the opportunities in those countries and what obstacles must be overcome to consolidate exploration in the short and medium term.

Figure: Oil Prices


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