Latin America and the Caribbean: Emerging Natural Gas Buyers and Producers in 36 Months
As the global energy landscape shifts, Latin America and the Caribbean present a unique opportunity for growth in natural gas production and consumption. This article explores which countries are set to become the largest buyers and producers of natural gas within the next 36 months. We'll delve into the dynamics of both buyers and producers, driven by the availability and economic benefits of natural gas.
Buyers
Mexico is poised to become the single largest buyer of natural gas in Latin America within the next 36 months. The reasons behind this prediction are rooted in the economics of global energy markets and the resource proximity.
America's shale gas production is prodigious, with hundreds of billions of cubic feet being flared every year. According to data from the EIA, this amounts to 15 billion cubic feet a day that is twice the total natural gas consumption of Germany. A significant portion of this excess gas, about half, is in the Permian Basin, which is conveniently located right next to Mexico. This proximity makes American natural gas a highly attractive and cost-effective alternative to more expensive fuel oil.
Recognizing the potential, Mexico has made a strategic decision to switch from fuel oil to natural gas in its power plants. This shift is already seeing more than 3-4 billion cubic feet a day of natural gas being shipped to Mexico from the US. As the infrastructure continues to expand, I predict this figure might double within the next three years, making Mexico the dominant buyer in the region.
Producers
When it comes to production, the focus turns to offshore areas, particularly in Guyana, where significant discoveries promise to revolutionize the region's natural gas output.
ExxonMobil has made a series of oil field discoveries in the Stabroek block offshore Guyana, leading to the logical conclusion that natural gas would also be present in the area. As a consequence, Guyana will emerge as a major natural gas producer in 2020, generating more natural gas than it can use. The government's management of this newfound wealth will be crucial. If done correctly, more substantial investments are likely to follow, leading to the discovery of more natural gas fields. With the biggest field potentially producing as much as 1 billion cubic feet a day by the end of 2021, Guyana stands at the forefront of Latin American natural gas production.
Bolivia, long known as the largest natural gas producer in Latin America, will maintain its position. Nonetheless, Argentina could usurp Bolivia's lead by the end of 2021 if it manages to rectify its current challenges and investment gaps swiftly.
Cuba, sitting in a geologically rich area of the Gulf of Mexico, has tremendous potential for both oil and natural gas. However, Cuba's reluctance to allow foreign investment has hindered progress. Even if foreign investment were to be initiated tomorrow, it would take at least five years for any production to come online, and more likely 10 years. This delay is compounded for natural gas, which requires the development of end-use infrastructure such as pipelines, processing stations, power plants, and chemical plants. Given these challenges, I anticipate that any significant contributions from Cuba to the natural gas market are more likely to be achieved in the mid-to-late 2020s, although potential large discoveries could be realized by the end of 2021.
Conclusion
The future of natural gas in Latin America and the Caribbean is bright, driven by the economic and strategic advantages offered by Guyana's impending gas production and Mexico's growing demand. As these regions continue to adapt and invest in their energy infrastructure, the global community can expect significant shifts in the natural gas market within the coming years.