The profound changes in hydrocarbons production globally in the past decade, mainly due to the unconventional oil and gas revolution in the US, are encouraging the construction of new pipelines in Latin America. That tendency, coupled with the need to expand transport capacity due to increased production in several countries in the region, has led in recent years to a noticeable jump in investment in the sector.

Mexico is a prime example. Between 1995 and 2013, gas pipelines totaling 1,789km were built, requiring investment of US$2 billion. In coming years, over 6,350km of pipelines will be built at a cost of more than US$13 billion. The main reason behind this expansion is the desire to replace oil used for power generation with low-cost natural gas imported from the US.

Increased shale production in the US is also affecting Colombia. Given the projected decline in US oil imports, works are underway to connect productive areas of Colombia with the Pacific in an attempt to boost exports to China and India. Peru, meanwhile, is seeing investments to expand gas transport capacity from the rich Camisea deposit to the rest of the country.

However, some of the projects in the region are being delayed given the sharp drop in oil prices and lower production levels. In addition, there are security problems related to guerrilla groups, and communities in some areas where pipelines will be built are opposing the projects.

This report looks at the state of pipelines in Latin America.

Figure: Oil Price Outlook


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