By Felicia Graham
SAN DIEGO, June 9 – The International Energy Agency (IEA) gave Latin America an optimistic demand forecast in its first-ever Medium-Term Market Report for the global gas issued this week.
“Latin America’s gas demand is projected to increase by 29% over 2011-17, from 139 bcm (billion cubic meters) in 2011 to 179 bcm in 2017,” IEA reported, saying that 80% of the region’s total gas consumption in 2011 came from Argentina, Brazil, Trinidad and Tobago, and Venezuela.
Brazil was the force behind much of the demand growth in 2010, and that held true throughout 2011, despite a slight decrease in growth demand, IEA said. It added that Brazil’s demand growth nearly tripled to 24 bcm in 2010 from 9 bcm in 2000.
IEA predicts that Brazil’s demand will nearly double again within the next five years, reaching 43 bcm in 2017. It said Brazil accounts for half of the additional gas demand predicted between 2011-17, while Argentina represents the region’s second largest demand growth.
NOTEWORTHY INCREASES
Several other Latin American countries also witnessed noteworthy increases in gas demand, IEA said. “Demand in Bolivia rose by over 10%, benefiting from higher domestic production,” IEA said, while detailing a “surge” in Argentina’s gas consumption
Peru also saw steady growth in gas demand as new liquefaction plants came online in 2011, but demand for gas dropped in Colombia and Trinidad and Tobago
Overall gas consumption in members of the Organization for Economic Cooperation and Development (OECD) Americas increased to 862 bcm in 2011 from 840 bcm in 2010, IEA said.
Most of this was due to steep increases in demand from the U.S., but Latin American states such as Mexico and Chile saw larger increases, too.
Mexico and Chile, the only two Latin American OECD countries, are witnessing “rapidly growing demand,” while “Mexico is another rapidly growing LNG market. Its LNG demand has doubled over the last three years.”
POWER GENERATION
Meanwhile, Chile’s gas demand is steadily increasing, rising to 6.2 bcm in 2011 from 5.3 bcm in 2010. “The main drivers behind gas demand increase are the power generation and industry sectors, contributing to half of the incremental gas consumption,” IEA said.
IEA said Latin America’s overall demand will have increased by roughly 3 bcm, reaching 139 bcm, with demand driven largely driven by Brazil.
Meanwhile, on the supply side, the Americas are set to see the world’s largest increase in production, led largely by the U.S.
In 2011 the U.S. produced 653 bcm of gas, but IEA said the figure will rise nearly 18% to reach 769 bcm in 2017, due mainly to developments in shale gas.
In Latin America, IEA said most growth in supply will come from Brazil (62%), with “some modest production growth in Bolivia, Colombia, and Peru.”
‘MARGINAL INCREASES’ IN PRODUCTION
IEA said Latin America’s gas production witnessed “marginal increases” from 161 bcm to 164 bcm in 2011, again due largely to production boosts in Brazil, but also in Peru and Bolivia.
“Brazil is expected to be the fastest growing producer in Latin America, with gas production increasing from 16.7 bcm to 32 bcm by 2017,” it said.
Brazil alone increased by an estimated 18% in 2011, with most of the incremental production coming from offshore areas outside the Campos basin where production gained 44%. Onshore production represented only 28%.
Argentina’s gas output has continued the decline that begun in 2004, dropping 3% in 2010-11. The IEA attributes this decline to the slow move towards nationalization and a “cloudy” investment climate.
ARGENTINA ‘MOST PROMISING’
“As of April 2012, YPF, Petrobras, Tecpetrol and Argenta Argentina had also lost some license areas, because they failed to increase production,” IEA said.
“Argentina could be the most promising country given its alleged tight and shale gas resources,” IEA said, citing estimates of 19 trillion cubic meters (tcm) of shale gas. But IEA said that extensive reorganization will be required to realize Argentina’s potential.
Overall, IEA said that the outlook for Latin America’s gas production is “not particularly bright” if one excludes Brazil from the picture as countries such as Argentina, Bolivia and Venezuela have promising gas reserves, but have failed to reach their production targets.
Luckily, Latin American countries have cheap U.S. shale gas to rely on while their own production capacities develop, IEA said.
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