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Matthew Smith

Matthew Smith

Matthew Smith is Oilprice.com's Latin-America correspondent. Matthew is a veteran investor and investment management professional. He obtained a Master of Law degree and is currently located…

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The 3 Most Exciting Oil And Gas Exploration Plays In South America

  • South America has become a favorite continent for big oil companies, with Argentina's Vaca Muerta shale, Suriname's Block 58, and Guyana's offshore drilling attracting significant attention.
  • Argentina's Vaca Muerta shale formation is driving the country's unconventional oil boom, with rising production and investment despite economic challenges.
  • Meanwhile, offshore blocks in Guyana and Suriname are garnering attention from some of the biggest oil companies in the world.
oil and gas

After Exxon’s string of high-quality oil discoveries in offshore Guyana delivered more than 11 billion barrels of oil resources South America started garnering considerable attention from energy investors.  This saw South America emerge big oil’s new favorite continent. While analysts describe Guyana as the world’s most exciting frontier oil play it is not the only South American country attracting interest from global energy companies. Argentina is undergoing a massive unconventional oil and gas boom which sees the crisis-riven country regularly reporting new production records. Then there is Brazil which is tipped to become the world’s fourth-largest oil producer by the end of the decade. South America is attracting significant attention from big oil and three countries stand out as the continent's hottest drilling locations.

#3 Argentina

Argentina is once again embroiled in an economic crisis where rampant inflation is eroding the wealth of everyday Argentineans and destabilizing the economy. While yet another sovereign debt default was narrowly avoided South America’s second-largest economy is undergoing considerable turmoil. By April 2023, the country’s inflation rate had broken through every forecast soaring to an annual high of 109%. This is sharply impacting consumers who are facing further headwinds as the economic crisis heats up and Argentina’s drought worsens. Indeed, Argentina is teetering on the edge of a deep economic crisis with no sign of a prolonged economically damaging drought ending any time soon.

The national government in Buenos Aires, for over a decade, views the vast 7.4-million-acre Vaca Muerta shale formation in the Neuquén Basin as a silver bullet for Argentina’s vast economic and fiscal woes. In as little as two years Argentina’s oil output has grown by a stunning 25% to 627,730 barrels per day during April 2023 which was a mere 0.5% lower than the all-time production record reported of 631,103 barrels daily for March 2023. Natural gas production is also soaring. Argentina pumped 4.4 billion cubic feet of per day during April 2023 which was 3% lower month over month and 12% less than the all-time record of nearly 5 billion cubic feet daily lifted during August 2022. 

It is rapidly rising shale oil and gas production from the Vaca Muerta that is driving this stunning. Shale oil now makes up 48% of Argentina’s petroleum production compared to 41% a year ago while shale gas is responsible for 57% of total natural gas output against 53% a year earlier. Analysts believe that the Vaca Muerta alone could be pumping one million barrels of oil by the end of 2030, although a lack of infrastructure, notably pipeline takeaway capacity is weighing on efforts to significantly lift production.

Activity in Argentina’s oil patch, and the Vaca Muerta in particular, is ramping-up at a frantic pace. According to the Baker Hughes international rig count, there were 58 active rigs in Argentina at the end of April 2023 compared to 54 a year earlier and 33 for the same period in 2021. Investment in Argentina’s oil patch is rising at a solid clip. For 2023, state-controlled oil company YPF intends to invest $5 billion which represents a notable 22% increase compared to a year earlier. The national oil company’s CEO announced in April 2023, that in conjunction with partners, YPF is targeting the development of $6 billion to $7 billion of infrastructure in the Vaca Muerta to boost hydrocarbon exports from the formation. These plans, however, could be disrupted by inflation and Argentina’s worsening economic crisis.

#2 Suriname

It wasn’t long ago that Suriname was being touted as the hottest frontier oil play after neighboring Guyana, with which the former Dutch colony shares the Guyana Suriname Basin. By 2022, 50% partners TotalEnergies, which is the operator, and Apache had made five commercial oil discoveries in deepwater Block 58. It is believed that the block could contain anywhere from 5 billion barrels to as much as 6.5 billion barrels of exploitable oil resources, potentially making it a high-quality asset on the scale of Guyana’s prolific offshore Stabroek Block.

Initially, it was expected that TotalEnergies and Apache would make a final investment decision, known as an FID, during 2022 with first oil from the block expected by 2025. The FID, however, was delayed because of a mismatch between seismic data, drilling results, and the high oil-to-gas ratio weighing upon the commerciality of oil exploitation in the block. This delay was understandable when Suriname’s economic crisis is considered and that it will take up to $10 billion to develop Block 58 and bring the resource to first oil. 

While that sparked considerable concern in Paramaribo and among energy investors there are indications that the situation may not be as dire as originally thought. Positive results from appraisal drilling and flow testing, which sees TotalEnergies having identified at least 500 million barrels of oil resources, means the FID will likely be made during 2024 with it anticipated that first oil will be lifted during 2027. It is estimated that Suriname could be pumping as much as 650,000 barrels of oil by the end of 2030 despite the delayed FID.

Suriname’s burgeoning oil boom isn’t only about offshore Block 58, there have been discoveries in deep-water Block 53 operated by Apache in partnership with Malaysia’s national oil company Petronas and Block 52 operated by Petronas with partner Exxon. TotalEnergies, Chevron, Shell, and QatarEnergy have taken stakes in a series of shallow-water blocks auctioned by Suriname’s national oil company and industry regulator Staatsolie in 2021. The development of Suriname’s offshore oil resources will deliver a tremendous economic windfall for a country facing a deep economic catastrophe.

#1 Guyana

After a raft of oil discoveries by Exxon in the prolific offshore Stabroek Block, impoverished South American country Guyana emerged as Latin America and the Caribbean’s latest drilling hotspot. Indeed, industry analysts describe the former British colony as the world’s hottest frontier drilling location. There are signs that the feverish activity underway in offshore Guyana will gain further pace as foreign energy companies pick over the spoils. Even Georgetown’s efforts to boost oil revenue by introducing a stricter production-sharing agreement with a 10% royalty rate, a reduced cost recovery threshold, and a 10% corporate tax have done little to deter interest in offshore Guyana.

The impoverished South American microstate has gone from the first world-class discovery in 2015 to first oil by 2019, a four-year period, which represents a stunning pace of development for a major billion-dollar energy project. By April 2023, Guyana was pumping nearly 400,000 barrels of crude oil per day, which is well above the nameplate capacity of the two FPSOs operating in the Liza oilfield. Through the implementation of further efficiencies and improvements to the FPSOs Exxon can further bolster production. It is anticipated that Guyana will be pumping at least 1.2 million barrels per day by 2027. Oil production in the former British colony could rise even higher than predicted because Exxon has made two additional oil discoveries already during 2023 and intends to bring two operations online by the end of 2025. The energy supermajor gave the $12.7 billion Uaru oil project the greenlight last month.


Offshore Guyana is not only about the prolific Stabroek Block. The country is attracting considerable interest from foreign energy companies as more oil discoveries are made. The latest being CGX Energy’s discovery with the Wei-1 wildcat well in the Corentyne Block. According to the company, which is 78% owned by Canadian intermediate oil producer Frontera Energy and also holds a 68% interest in the block, the well has encountered multiple oil-bearing intervals. Nevertheless, according to CGX, it is uncertain whether the hydrocarbons encountered are sufficient to underpin a commercial development. This does indicate that the petroleum fairway contained in the Stabroek Block continues through the northern tip of Corentyne into Block 58 offshore Suriname.

By Matthew Smith for Oilprice.com

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