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LNG for Latin America

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LNG Industry,

Steady economic growth in Latin America has been a fundamental factor in developing energy demand in various countries in the region. This is evident from the increasing primary energy consumption in Latin America, which was more than 750 million toe in 2013 and is forecast to jump to 1400 million toe by 2030.

The developing economy in Latin America, coupled with the need to switch to cleaner fuels, has accelerated demand for gas as a source of energy. In 2013, gas consumption in Latin America went up to 8592 billion ft3, a 5% increase from the levels in 2012. In the last five years, Latin America has shown greater dependence on LNG to fulfill its growing gas demand. The trend of importing LNG to achieve Latin America’s energy security is expected to continue.

According to the US Energy Information Administration (EIA), Latin America holds technically recoverable shale gas resources of around 1900 trillion ft3. Argentina, Mexico and Brazil hold huge amounts of shale gas resources. Due to lower exploration activity in some parts of Latin America, domestic gas production has been continuously decreasing. On the other hand, with improved economic and financial support from the government and investors, Latin America will have the potential to become self-sufficient in terms of energy requirements by 2030.

A surge in energy demand

A boost in gas demand, combined with lower domestic gas production in various Latin American countries, has triggered increased LNG and piped gas imports. In 2013, nearly 2060 billion ft3 of gas was consumed through LNG and pipeline imports.           

Latin America is comprised of countries that import and export LNG. Countries such as Mexico, Argentina, Brazil and Chile import large quantities of LNG to support their growing energy portfolio. On the other hand, countries such as Peru and Trinidad and Tobago are suppliers of LNG in the international market.

The energy sector in Latin American countries is highly regulated by governments. The hydrocarbons sector in most Latin American countries falls under the purview of national petroleum companies that have up to 90% control over their energy industry. Consequently, this has discouraged foreign investments in Latin America, leading to slower development of energy resources. However, over a period of time, some countries have shown their receptiveness to private investment in the oil and gas sector. Mexico and Argentina, for instance, are in the midst of revising their policies to encourage private and foreign participation.

Mexico’s energy reform initiative

A growing economy has catalysed the development of Mexico’s energy sector. High growth in the power and industrial sectors has led to an increase in demand for gas. This high gas demand stems from Mexico’s continuous efforts to switch to cleaner and more efficient fuel. Also, the cost to generate power using gas as a fuel is much lower than other fuels. However, dwindling domestic gas production has augmented gas imports.

Mexico is gradually turning to gas as a fuel for its power generation and industrial sector. To fulfill demand from the expanding electricity sector, Mexico has…..

This article originally appeared in the January 2015 issue of LNG Industry. To read the full version of this article, register for free today.

Written by Rasholeen Nakra, Frost & Sullivan, Canada. Edited by

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