Argentina, Guyana, and Brazil are on track to spearhead Latin American oil production growth in 2026, though the potential reintegration of Venezuelan output casts uncertainty over the region’s long-term capital expenditure outlook, Rystad Energy said in its latest update.
Despite the supermajors’ long-term caution regarding underwriting risks in Venezuela, the country is seeing increased engagement from traders and companies like Trafigura and Hillcorp, according to Rystad’s report.
These entities are attracted to short-term, structured opportunities, which suggests a potential shift in portfolio strategies.
Venezuela’s return casts uncertainty
Despite lingering legal uncertainties and weak institutional legitimacy, the recent lifting of sanctions and the overhaul of Venezuela’s hydrocarbons law support US initiatives to promote the sale of Venezuelan oil.
Flagship oil projects in Argentina, Guyana, and Brazil are forecast to maintain a competitive edge over Venezuela’s supply through at least 2030, according to Rystad Energy’s analysis.
These projects are expected to boost oil production by over 700,000 barrels per day (bpd) this year.
While Venezuela could potentially add 300,000 bpd to the market in the short term, investment is unlikely to shift from the current strong Latin American producers to Venezuela’s struggling infrastructure, given the uncertain business climate.
“A Venezuelan oil industry makeover will be costly and lengthy, with the big three in the region – Argentina, Guyana and Brazil – remaining largely indifferent to the estimated, near-term return of Venezuelan crude,” Radhika Bansal, vice president, oil & gas research at Rystad Energy, said in the analysis.
Oversupply, whether from Venezuelan or even Iranian barrels, is what is truly testing the financial resilience of operators who would otherwise gain from a revived oil industry in the Bolivarian Republic.
Investment focus shifts to near-certain ROI
Investment in Latin America is projected to rise in 2026, yet the volume of conventional reserves brought into production will be 45% less than the previous year, the agency’s calculations showed.
This indicates a strategic shift towards consolidating investment on projects that offer a near-certain return on investment (ROI).
Following a year of substantially lower Final Investment Decisions (FIDs) in the region, 2026 is anticipated to follow a similar pattern.
Capital will predominantly be directed to new (greenfield) projects in Guyana and Suriname.
Concurrently, Argentina is poised to spearhead investment in existing (brownfield) projects, driven by the aggressive acceleration of production in Vaca Muerta.
Latin America’s oil production is projected to surpass 8.8 million bpd this year.
This significant output is the primary driver of non-OPEC+ supply growth, highlighting a shift in the region where it is no longer a unified oil entity.
Instead, the “big three” now dominate the sector’s future, with many other players falling behind.
Brazil is set to be the main engine of this growth in 2026, with production anticipated to exceed 4.2 million bpd.
Shale and deepwater drive robust investment growth
This is largely supported by the large scale, resilience, and cost-competitiveness of its pre-salt developments.
Brazil’s production increase this year is specifically linked to the ramp-ups and start-ups of new floating production, storage, and offloading (FPSO) vessels.
The primary catalyst for heightened regional investment is the thriving shale sector, projected to expand from $9.4 billion in 2025 to almost $11 billion this year, entirely driven by Argentina, according to Rystad Energy.
Furthermore, the offshore deepwater sector is anticipated to attract $42 billion in investment in 2026, marking a 7.7% increase year-over-year, the analysis showed.
This upward trend is underpinned by robust fundamentals in the Vaca Muerta shale, along with stable production from pre-salt reserves and emerging opportunities in Guyana and Suriname.
Smaller energy companies are showing interest in Venezuela for several reasons. The licenses granted lower the initial capital investment required.
Additionally, they provide a source of heavy crude oil for US Gulf Coast refineries at favorable prices. This setup also allows traders to manage the complex logistics, blending, and licensing requirements necessary for selling Venezuelan crude.
Despite short-term shifts in focus toward Venezuela, the economic viability of projects with long lead times and substantial upfront investments, such as those in offshore Brazil, Guyana, and Suriname, remains strong.
These projects are secured by competitive breakeven prices, making them less sensitive to current oil price fluctuations.
Similarly, the Vaca Muerta shale play—although a shorter-cycle development—is also positioned for resilience against a potential Venezuelan market re-entry and declining prices, thanks to its commitment to new infrastructure development.
Long-term viability and impact on regional neighbors
“Supposing oil demand stays resilient through 2035, and the impact of years-long underinvestment is fully felt, Venezuelan barrels would become far more relevant,” Bansal said.
Venezuelan oil production could become economically viable, particularly if oil prices rise, provided the industry begins making more long-term, financially sound decisions now, she added.
However, more attractive barrels will still be at play, with Venezuela’s extra-heavy, emissions-intensive oil posing persistent challenges.
In the near term, countries geographically close to Venezuela, beyond the “big three,” may establish unique relationships within an open exploration and production (E&P) market.
Specifically, Trinidad and Tobago could benefit from opportunities to use Venezuelan offshore gas to supply its liquefied natural gas (LNG) facilities.
Colombia faces potential challenges, including increased competition for capital due to its limited remaining oil development opportunities.
Furthermore, the country may experience labor competition, as the revitalisation of Venezuela’s oil production will likely require a specialised workforce currently available in Colombia.
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