Political Risk Latin America Blog @PolRiskLatam

Latin America’s oil power transition

Posted in News and Articles, Political Risk by politicalrisklatam on December 15, 2010

by Jeremy Martin for Institute of the Americas – Business Journal, December 15th, 2010.

There is an important shift occurring across Latin America today. It is a transition that points to a reordering of the region’s oil producers and their corresponding geopolitical influence. What is this shift that is affecting the overall energy profile of the region and what are the important changes in the geopolitics and petro power across the region and why have we seen such an evolution?

Historically there have been two tiers of oil producers in Latin America. The first tier has been Venezuela and Mexico and the second tier everyone else including Brazil and Colombia.Venezuela and oil are practically synonymous. Oil has gushed from Venezuela since early in the 20th century and the nation was a founding member of the OPEC oil cartel.

Oil in Mexico is similarly part of the nation’s DNA, especially since the nationlaization of foreign firms before WWII and the creation of the state oil firm Pemex– which remains the state monopoly and only game in town.But, the big stories of the new decade are the moves by Brazil and Colombia.

Brazil has leaped from “also ran” to the top tier of oil powers in Latin America. Colombia, after years of internal strife and security issues has recently attracted huge amounts of investment and greatly recovered its oil production.Indeed, not only is Brazil moving up the list, they could ascend to the top of the heap very soon. Brazil has doubled their oil output since 2000 and some estimates point to exports from Brazil of roughly one million barrels per day by 2020.  Colombia has similarly marked a move up the list of top producers and could soon hit production of one million barrels per day. (continue reading… )

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