Energy Workforce’s Latin America Chapter kicked off 2022 with a session focused on the opportunities and challenges that lie ahead for the region during the energy transition. As countries and communities seek to lower their greenhouse gas impacts, energy service companies have a unique role as enablers in the decarbonization of fossil fuel extraction and innovations beyond the well.
The session, led by Latin America Chapter Chair, Juan Garavaglia, Baker Hughes, featured Rice University and Baker Institute Graduate Fellow, Cristopher De Luca’s analysis on key factors as the region navigates coming shifts in energy development and usage.
The implications of global oil demand continuing to increase amidst pressure to decarbonize put the Latin America region in a particularly interesting position.
“Latin America has the second largest [oil] endowment in the world,” De Luca said. “It also has higher costs than the Middle East producers, however some of the fields and projects are competitive with respect to those in the rest of the world.”
De Luca reviewed some of the region’s opportunities in the energy transition including Argentina, Brazil, Colombia and Mexico – all of which have state-owned oil and gas companies. Due to geological formations, these countries have significant potential to develop renewable energy while continuing to have highly competitive conventional and unconventional basins.
For the Latin America region, protection of private investment and rule of law have been challenging areas over time.
“These institutions play an important role in determining the path of the energy transition as the private sector is generating growth and innovation.”Cristopher De Luca, Rice University and Baker Institute Graduate Fellow
De Luca also discussed how countries in the region are addressing their dependence on oil and gas exports as fiscal revenue. In countries like Colombia, Ecuador, Guyana and Venezuela, oil and gas are at least a third of total exports, so there is a need for strategic thought on how to navigate these shifts. Specifically, national oil companies will need to decide on how to diversify their business models to become “national energy companies,” such as Colombia’s Ecopetrol, or heavy investors in decarbonization of oil and gas activities, such as Petrobras.
Latin America Chapter Chair Garavaglia focused his closing comments on the interaction between service companies and customers in navigating the energy transition. Baker Hughes’ approach relies on technologies such as hydrogen, carbon capture, renewable energy and energy storage as opportunities to meet customer and country’s goals.
The Chapter will meet again during the Argentina Oil & Gas Show for a reception hosted at the U.S. Ambassador’s residence on March 22.
If you are interested in joining the Latin America Chapter Steering Committee, please reach out to SVP Government Affairs, Tim Tarpley.
Maria Suarez, Director Government Affairs, writes about industry-specific policies for the Energy Workforce & Technology Council. Click here to subscribe to the Energy Workforce newsletter, which highlights sector-specific issues, best practices, activities and more.