South America energy CEOs confident in economic growth

CEOs in South America's energy sector are more optimistic about domestic and global growth than their global peers, according to a KPMG report shared with BNamericas.  

However, regional energy CEOs are more cautious regarding expected revenues over the next three years. In the 2021 survey, 55% of the leaders estimated their companies’ revenue would grow between 2.5% and 5%; in 2022, 56% expected 0.01%-2.5%.

“The result of this study is important at this time, because this year there are high levels of uncertainty for the energy sector, as a result of scarcity in international markets and changes produced in the external demand of countries, due to the conflict in Europe and the impact on the prices of major products, like oil, gas and energy in general,” KPMG partner co-leader Americas and South America energy head, Manuel Fernandes, wrote in the report. 

Fernandes highlighted that the conclusions should also be understood in light of the situation in Europe, where countries are more exposed to the Russia-Ukraine war and therefore more susceptible to economic, political, and social effects. 

“This more cautious view can be credited to the geopolitical risks and the high levels of uncertainty they entail,” Fernandes wrote.

ESG AND GEOPOLITICAL RISKS

Among the operational measures industry CEOs intend to implement to ensure growth, ESG (environment, social and governance) initiatives have been reassessed. In 2021, this agenda was mentioned as a priority by 23% of respondents, now by only 6%. 

On the other hand, measures related to adapting to current geopolitical risks have gained ground.

The survey indicated that for 38% of South American CEOs “the lack of appropriate technological solutions,” represents the main barrier to zero carbon emissions and similar climate ambitions, while the figure reached 44% among energy CEOs. 

Other aspects highlighted were the high cost of decarbonization and a lack of experience and skills of the workforce. 

Most South American leaders said they would invest between 1% and 5% of revenue in sustainability, the same percentage as in 2021.

OVERVIEW

For its eighth edition of the CEO Outlook, KPMG interviewed 1,325 CEOs in 55 countries, including Argentina, Bolivia, Brazil, Chile, Colombia, Peru, Uruguay, and Venezuela, across 11 industries, including energy. 

Of the total, 138 respondents came from the energy industry, working mainly in the more mature economies, 16 were from South America, 12 of which worked in the oil and gas industry, three in the utilities sector and one in the renewable energy industry.