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Latin America Oil Supply - July 2015

Source: OPEC 7/28/2015, Location: South America

Latin America’s oil supply is estimated to grow by 0.12 mb/d to average 5.13 mb/d in 2015, unchanged from the previous MOMR. Latin America was the second-highest driver of growth in 2014 among all non-OPEC regions. Brazil was the main driver of this growth in 2015, while oil production in Colombia is expected to decline by 40 tb/d to average 0.96 mb/d. Similarly, oil output is forecast to decrease in Argentina, Trinidad and Tobago, and Latin America Others, each by 10 tb/d in 2015.

On a quarterly basis, Latin America’s supply in 2015 is expected to stand at 5.24 mb/d, 5.09 mb/d, 5.12 mb/d and 5.08 mb/d, respectively.

Brazil’s liquids supply is expected to average 3.04 mb/d in 2015, an increase of 0.18 mb/d over the previous year, revised up by 20 tb/d from the previous MOMR. Brazilian liquids output was pegged at 2.99 mb/d, including biofuel output and 2.51 mb/d of petroleum liquids in May. Oil production from pre-salt fields reached an average of 0.73 mb/d in May, which will keep growth strong for the next few months up until the end of the year. It is expected that total liquids supply will remain more or less stagnant at 3.05 mb/d in the next quarters. Pre-salt investment was maintained, although post-salt spending was reduced drastically.

So, while pre-salt output will continue to grow, overall production is at risk from high declines in the post-salt Campos basin, which, following 13 months of growth, has registered y-o-y declines across April and May. Moreover, Petrobras’ new five-year business plan made severe cuts to upstream capex (-34%) and significantly reduced the number of production units due to enter operation by 2020 from 30 to 21, of which 16 are contracted.

Nevertheless, defined projects for 2015 and 2016 have thus far not been cancelled. On a quarterly basis, Brazil’s supply in 2015 is estimated to stand at 3.06 mb/d, 2.99 mb/d, 3.06 mb/d and 3.05 mb/d, respectively.

Colombia’s output is expected to drop sharply in June, given the attacks that occurred on three of the country’s six major pipelines, which caused production disruptions of about 0.2 mb/d during the month. Out of the country’s six major oil pipelines (one under construction), four of them connect production fields to the Caribbean export terminal at Covenas. Three of these major pipelines ? TransAndino, Cano Limon-Covenas and Bicentenario ? with a total capacity of 400 tb/d, were attacked, and oil transportation was halted for several days. Oil production in Colombia is forecast to decline by 20 tb/d to average 0.99 mb/d in 2015, an upward revision by 20 tb/d over the last estimation. On a quarterly basis, Colombia’s supply in 2015 is estimated to stand at 1.05 mb/d, 0.98 mb/d, 0.96 mb/d and 0.96 mb/d, respectively.

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