Market Overview for the Oil and Gas IndustryBy Miriam Bello | Thu, 07/15/2021 - 18:25
You can watch the video of this presentation here.
After a year marked by a decrease in oil prices and a pandemic that took the world by storm, the oil and gas sector experienced changes that affected severely their projects. To understand the current state of the oil and gas industry, Pietro Ferreira, Senior Regional Analyst of the Americas at Energy Industries Council (EIC) presented the topic “Present Market Overview for the Oil and Gas Industry” during Mexico Oil and Gas Summit on July 15.
The Energy Industries Council is a trade association that represents the energy supply chain which covers all energy sectors. They support close to 70 countries and help to identify business opportunities and expand into new export markets. The council maps three business intelligence data bases: COPEX, OPEX and EIC.
Ferreira began his presentation by listing the countries with the highest market opportunities for the energy sector. The US is number one, with more than a third of projects associated with renewables, followed by midstream and downstream at a low measure. Brazil is the second country in the list, with also, the majority of its projects focused on renewable energies. Canada takes third place, similar as Brazil, which has the majority of its projects focusing on renewables. Mexico places fourth, with the largest number of projects concentrating around renewable energies. “Here is important to note that despite the variety of the projects, or despite the majority of projects being on renewable energies, the majority of the investment is still going to the oil and gas projects for up, mid and downstream, which takes more than 50 percent of the projects in the US and Canada,” said Ferreira.
Information regarding projects in Mexico indicate that the majority of them focus in the upstream sector and combined make up a CAPEX of US$70 billion with close to 50 projects. The downstream sector is the second in terms of CAPEX, compared to renewables, which has a rather low CAPEX.
Mexico’s energy project pipeline has increased recently, with renewables at the top of the list, nevertheless, oil and gas are still accountable for most of the projects. Mexico had a contracting activity in 2020 compared to the previous year, activity in the upstream, power and renewables were reduced, and there were more contracts in midstream and downstream sectors. These projects were led by MPL’s project Low Pacific and PEMEX’s Dos Bocas refinery.
The majority of Mexico’s upstream projects focus on PEMEX, as it has a long standing to revert production decline and the company has prioritized the development of 20 oil and gas fields, most of them located offshore. “One of these projects is Pokche, where PEMEX is expected to invest over US$800 million in exploration campaigns. Recently, the NOC announced they will be operating the Zama field, instead of Talos Energy.
For midstream projects, Mexico has a great opportunity for export gas produced in the US, as there is no need to transfer through the Panama Canal. For midstream projects, Mexico counts on Energia Costa Azul, LNG Export Project in phase 1 by ECA LNG, Amigo LNG Export Plant in phase 1 by AMIGO LNG, Amigo LNG Plant phase 2by Amigo LNG, North American Pacific Coast LNG by Mexico Pacific Limited, and Vista Pacifico LNG Terminal by IEnova.
For downstream projects, Mexico is ramping-up the construction of the massive Dos Bocas refinery, which is expected to produce 340,000 barrels a day, coupled with the revamping of Mexico's six existing refineries. These seven projects will require a combined CAPEX of US$15.8 billion. Beyond Mexico, Ferreira explained that Brazil also had very keen projects in developing reserves. For downstream projects, Brazil has 11 key projects going on.
Aside from Brazil and Mexico, the oil and gas industry should keep looking at Guyana and Suriname. After the Liza Field discoveries in 2015 in Guyana, the country´s potential sits next to Mexico, Brazil and the US. “Aside from its upstream potential, the Guyanese government and ExonMobil have partnered to carry out a gas to power project in the country, to bring gas produced on the Liza Field to the shore, as a gas processing plant.
The US has many types of upstream and exploration projects, nevertheless, Ferreira emphasized on Shell's Whale Field, which hopes to be ready by the end 2021, one which started in 2004. “The country has other projects, some large ones with petrochemicals and some small ones with renewable diesel.“
In general, there are opportunities for countries in Central and South America. For instance, in upstream, onshore reserves with Colombia, where the country also has much exploration on its Caribbean coast. “Despite the renewable projects in the region, CAPEX for midstream and downstream is massive. Along the region we see a variety of things, from very mature fields with strict policies and to other countries that are starting to implement regulations. “
There are opportunities beyond activities, many of the opportunities are to diversify and innovate in order to generate a cleaner energy matrix or network. Overall, Ferreira concluded that the region offers a positive emerging energy transition panorama, with a great opportunity for supply chain diversification, collaboration and innovation.