IDB sees big need for Latin American oil capital
Latin America's oil sector needs between $ 120 bn and $ 200 bn by 2020 to add 10 mm bpd of new crude oil production capacity, Inter-American Development Bank economist Ramon Espinasa said. Espinasa told an audience at the Carnegie Endowment for International Peace that Latin American production capacity growth on that order would help US energy security by increasing the share of oil imports from within the Western Hemisphere, while supporting resource-rich developing countries. If Latin American oil production were to double to 20 mm bpd by 2020, net exports would likely rise to 10 mm bpd from the current 4 mm bpd, he said.
"No doubt this would be the most important industry sector in our region over the next 20 years under this scenario,"
said Espinasa, who was chief economist at Venezuelan state oil and gas company Petroleos de Venezuela, or PdVSA, in
the late 1990s. Taking into account transportation costs, Latin American reserves are generally cheaper to produce
for the US market than Russian oil, he said.
But in the near-term, Espinasa said political obstacles prevent Venezuela and Colombia in particular from developing their oil reserves. He cited a decline in the Venezuelan rig count to one-third its 1997 level, a decline that coincided with the country's newly hawkish stance on oil prices within OPEC.