South America leads growth in global crude oil supply

South America is a key source of growth in global crude oil supplies as production in other regions stagnates. Brazil, Guyana and Argentina are among the fastest growing countries in terms of crude supply growth, and Venezuela has also seen a good recovery in recent months. The latest data showed Brazil’s crude and condensate production rose 7% from April to June, halting a five-month downward trend. Guyana’s rapid production growth slowed in the third quarter as key assets underwent maintenance, while Argentina’s shale oil production will continue to rise throughout this year and next as the field of Vaca Muerta shale is growing exponentially.

Elsewhere in South America, Colombia is expected to post a strong third quarter this year, with production averaging 797,000 barrels per day, up 12,000 bpd from the previous quarter. The country’s production is expected to decline starting in the fourth quarter and through 2025 as mature production declines.

Brazil

After a steady decline in the first quarter of this year due to a flurry of maintenance and other disruptions at assets operated by Petrobras, Brazilian crude output has rebounded from a low in April. May saw an output level of nearly 3.33 million bpd of crude oil and condensate, an increase of 132,000 bpd month-on-month. The reported top figure for June is 3.41 million bpd, adding another 87,000 bpd m/m. Rystad Energy expects the country’s output to rise further by 107,000 bpd m/m in July to 3.52 million bpd and continue to rise to bring Brazil’s output rate for 2024 to 3.76 million bpd.

The major driver of this growth is increased production of the country’s three key crudes – Tupi, Buzios and Mero. Those three grades combined are expected to rise by nearly 240,000 bpd in the third quarter. Marlim and Marlim Leste grades also rose significantly in May to around 25,000 bpd and 48,000 bpd respectively. The increase in production comes as assets grow after the aforementioned disruptions.

Next year is expected to bring strong growth in Brazil of nearly 400,000 bpd to over 3.9 million bpd on average by 2025, led by new startups in the Mero and Buzios fields, along with the new Bacalhau project. Mero 3, Buzios 7 and Bacalhau Phase 1 are the largest assets scheduled to come online by the end of 2025 and are expected to reach a combined 460,000 bpd by the end of 2025.

Mero 3’s launch date was pushed back to November this year, as FPSO Marechal Duque de Caxias only arrived in May. Similarly, FPSO Maria Quiteria in the Jubarte field is scheduled to start up in December 2024 and ramp up to more than 90,000 bpd by the end of next year.

Brazilian crude oil exports were flat m/m at around 1.5 million bpd in July. In fact, the level has remained almost the same since May of this year. China was the biggest consumer of Brazilian barrels in July, with nearly 690,000 bpd, which corresponds to nearly 45% of Brazil’s total crude oil exports. Brazilian exports were at their lowest level since December 2023 due to declining production levels, however we can anticipate an increase in exports in the coming months as crude oil production recovers.

Venezuela

Venezuela is expected to produce 932,000 bpd of crude this month, adding 4,000 bpd from July and continuing the trend of steady m/l growth, as reported by OPEC+ in its Monthly Oil Market Report. The country’s crude oil production has gradually increased since the first easing of sanctions in 4Q23 and has continued to rise even after the reimposition in April 2024.

The current iteration of our data maintains a positive outlook for Venezuela, with a healthy growth rate projected for this year and next, adding 126,000 bpd in 2024 and 62,000 bpd in 2025. Country-wide production for Venezuela is now estimated to average 940,000 bpd in 2H24, although this forecast may change following the recent outcome of the controversial elections held in the country. The upcoming US election could also impact Venezuela’s future crude outlook.

In the latest iteration of the data, Venezuela’s crude oil production outlook has been revised down marginally by around 6,000 bpd in 2H24 and by 11,000 bpd in 2025. The entire revision is carried out on the production of the Urdaneta Oeste (West) assets as half. – operator Maurel & Prom’s annual report showed lower-than-forecast updated production of 13,500 bpd, compared to its previous target of 25,000 bpd in gross field-level production by the end of the year.

Venezuela’s exports fell by more than 230,000 bpd in July as exports to China fell. The shutdown of certain blending and processing facilities that process production from the Orinoco belt resulted in the unavailability of diluted crude oil and increased delays in cargo loading and exports in July. The country’s elections during that period also negatively affected exports, as July exports averaged just 340,000 bpd. The US, China and Spain were the biggest consumers of Venezuelan barrels in the 224th quarter.

Guyana

Guyana’s August crude and condensate production is expected to average around 520,000 bpd. This is a significant increase of 120,000 bpd m/m from July’s average of 400,000 bpd, but well below the country’s H1 average of 626,000 bpd.

As part of the Gas-to-Energy (GTE) project, ExxonMobil interrupted production at Liza Unity in July to install and connect a 12-inch gas pipeline to the FPSO to transport gas onshore to the development site in West Wales Bank Demerara, where it is to be used as a source of electricity generation. Guyana’s government plans to use about 50 million cubic meters of gas per day to generate 300 megawatts of electricity. Liza Destiny was shut down in August for the same reason.

Crude oil production from the Liza field is expected to recover quickly and return to normal by September. We expect Guyana to produce over 610,000 bpd in the fourth quarter of this year, taking the 2024 average to 593,000 bpd. Average crude oil production in 2025 is expected to be relatively flat, although we expect to see an increase in production levels in 4Q25 as FPSO One Guyana comes on stream in the Yellowtail field.

Argentine

Argentina is a key driver of supply growth in Latin America. The nation’s output rose more than 7% y/y in 2Q24 to an average of 691,000 bpd. This year and next are forecast to be strong years for Argentina’s manufacturing, with an anticipated growth of 8% in 2024 and 13% next year. Current estimates show that the country is expected to surpass the 800,000 bpd production threshold in the second half of 2025, surpassing Colombia, which is expected to decline steadily next year due to its mature assets.

Argentina’s shale production is driving production growth, while other onshore sources are steadily declining. Crude and condensate production is expected to average around 733,000 bpd this month, with 56% coming from shale. This volume indicates an increase of more than 14% y/y in production.

The Vaca Muerta shale area has had an impressive growth rate since 2023 and accounts for over half of the country’s total production. The growth rate is boosted by steady production growth for several small assets within the project and sustained production levels from the largest assets such as Loma Campana and La Amarga Chica, which average around 85,000 bpd and , respectively, 65,000 bpd.

Of Rystad Energy

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