Non-OPEC+ oil growth finds its engine in South America, with Radhika Bansal

0:00 [Music] This is Let’s Talk Energy, your go-to podcast for smart energy insights. I’m your host, Noah Brener, and each week we give you an inside look at the dynamics shaping global energy markets through in-depth interviews with our own Rystad Energy experts as well as special guests. Today’s episode takes a deep dive into the oil supply picture in South America. The region is poised to become one of the largest—if not the largest—sources of new oil outside the OPEC+ producers group. Output growth from deepwater fields and shale will at least match, and potentially exceed, that of North America. This surge is driven by favorable geology and effective policies that keep development costs highly competitive, even at lower oil prices. At the same time, the continent remains an exploration hotspot as national and international oil companies look to boost reserves for a future where oil demand appears increasingly resilient. 4:00 So how much additional oil could South America add to global markets in the next five years? Which countries will drive that growth? Where are the exploration hotspots that could become the continent’s next giant fields? And how will South American countries and the companies working there maintain output gains? What wildcards could push forecasts up or down? To answer all this and more, I’m joined today from Oslo by Rodica Bonsal, Vice President in Rystad Energy’s analysis division and the leader of our South America upstream coverage. Rodica, welcome. “Thank you so much for having me, Noah.” Rodica explains that global liquids demand is expected to peak in the early 2030s at around 107 million barrels per day, remaining above 100 million through the 2040s before declining toward 75 million by 2050. On the supply side, currently producing wells will output less than half of today’s levels by decade’s end, creating an urgent need for new barrels. Sixty percent of conventional new supply is expected to come from outside OPEC+, and within that group, South America plays a critical role—growing by 560,000 barrels per day this year and 750,000 barrels per day next year. In comparison, North America is expected to add 275,000 barrels per day in 2026. 8:00 Rodica emphasizes that this growth does not depend on high oil prices. South American barrels remain competitive even at $40 Brent, thanks largely to low-cost deepwater developments that show muted price sensitivity. Brazil and Guyana will lead among deepwater producers, while Argentina’s Vaca Muerta shale will be essential onshore. By the end of the decade, Suriname is expected to join the group with its Grand Moengo development. In terms of companies, strong national oil companies—Petrobras, Ecopetrol, YPF—along with majors like Shell, TotalEnergies, Exxon, and Chevron, will all play central roles. NOCs contribute around 55% of production today, expected to decline to 50% as majors and independents ramp up. Brazil remains the region’s largest producer, driven by exceptionally productive wells—often 20–25,000 barrels per day each, with peaks reaching 50–60,000 barrels. Brazil’s wave of project sanctions between 2015 and 2019 has positioned it as a long-term net exporter, with output near 3.8 million barrels per day and a robust project pipeline sustaining growth into the 2030s. 12:00 Guyana, meanwhile, has surged from zero production a few years ago to around 700,000 barrels per day following ExxonMobil’s string of giant discoveries starting in 2015. Although discovery rates have slowed recently, major new FPSOs—like Jaguar and Aaru—are expected online by 2027, adding 500,000 barrels per day of capacity. With additional developments such as Longtail and Hammerhead, total capacity could reach 1.7 million barrels per day. Argentina’s Vaca Muerta is unique as an onshore shale story. The play itself didn’t change—but everything around it did: more stable macroeconomics, longer laterals, higher-productivity wells, infrastructure expansion, and improved takeaway capacity. Despite past volatility and regulatory challenges, the play now appears poised to push Argentina past 1 million barrels per day by 2030. Recent M&A activity has surged, driven largely by Argentina, with international companies reassessing portfolios and YPF divesting non-core assets. Although similar to the U.S. Permian in short-cycle characteristics, Argentina remains more constrained by infrastructure, regulatory approvals, and macroeconomic factors. 16:00 Gas is increasingly important to the Vaca Muerta narrative. Argentina could reach 8 bcf/d of gas production by 2030, with 6 bcf/d from Vaca Muerta alone. Major LNG projects are advancing, including the 6-mtpa Southern Energy LNG project (starting 2028) and YPF–Petronas Argentina LNG, planned at 18 mtpa, with partners like ENI and Shell—and recently ADNOC expressing interest. Turning to Venezuela, Rodica stresses that its barrels remain “risk barrels” due to sanctions and political volatility. Demand—particularly from Chinese independent refiners—and diluent supply remain key constraints. Despite sanctions, production has held near or above 1 million barrels per day at times, aided by Chevron’s limited license. Base-case expectations: roughly 1.1 million barrels per day this year and slightly lower next year. Upside exists if diluent flows increase, but long-term growth is constrained by PDVSA’s financial condition and political instability. Revoking Chevron’s license would create an immediate 70–80,000 barrel per day downside. 20:00 South America’s production is expected to peak in the early 2030s, but without new discoveries and effective management of existing fields, decline could be steep. Exploration success and improved recovery techniques will be essential. A major recent headline was BP’s Boomerang discovery in Brazil—its largest in 25 years. Though early in appraisal, Rystad estimates roughly 1.1 billion boe potential based on analogs. However, CO₂ content of 20–30% means full gas reinjection will be needed, consistent with Brazilian practice. Another frontier opportunity: ExxonMobil entering deepwater Trinidad and Tobago. The geology suggests a gas-prone play rather than oil, but commercial success could mean over $20 billion of investment and important supply for Trinidad’s LNG and petrochemical sectors. 24:00 Brownfield development—low-risk, low-cycle, low-cost—can help stabilize production while new exploration barrels are pursued. In Brazil, increasing average recovery rates from 26% to 33% across top fields could unlock 11 billion barrels and extend plateau production by a decade. Colombia, facing declines, could also sustain volumes with improved recovery even without new discoveries. As COP30 wraps up in Brazil, there is debate about South America expanding fossil fuel production. Yet many countries in the region lead in climate performance: Brazil ranks in the top 10 of Rystad’s decarbonization index, Guyana is carbon-neutral, and Suriname is carbon-negative thanks to forest carbon sinks. South America’s strategy reflects a pragmatic approach—developing low-carbon barrels while protecting natural sinks and reinvesting hydrocarbon revenues into decarbonization. Brazil’s electricity grid is 90% renewable, and its upstream emissions intensity is already below global averages. 28:00 Brazil’s deepwater production is expected to push upstream emissions intensities even lower toward 2030, thanks to modern platforms, gas-powered generation, reduced flaring, and innovations like fully electric combined-cycle turbines on FPSOs such as Mero 3 (Miroirera). Other countries take different approaches—Colombia’s administration has halted new licensing rounds and raised taxes on fossil fuel firms, aiming to pivot toward tourism and agriculture. But Rodica notes that if the country ultimately must import oil, the overall carbon footprint may increase. She argues there is no contradiction between responsible development and climate pledges. As long as demand persists, the focus should be on low-carbon, cost-competitive barrels—and South America is well positioned to provide them. 32:00 Rodica concludes that South America will be one of the most important contributors to global supply growth through 2030. Brazil, Argentina, and Guyana lead the way, with Suriname emerging later this decade. Venezuela remains a wildcard. Decline rates present a challenge, but exploration successes and improved recovery offer pathways to additional volumes. “Rodica, thank you for joining us.” “Thank you so much, Noah.” Thanks for listening to Let’s Talk Energy. This podcast is a production of Rystad Energy, produced by Laura Rodríguez Skog and Bo Doke. Check the show notes for more analysis, follow us on social media at @RystadEnergy, and subscribe. Email questions or suggestions to podcast@rystadenergy.com . Join us next week for more Let’s Talk Energy.