One of the most important regions which will have in the long term more and more essential impact on the global energy market is Latin America. The Gazprom Group already realizes anchor projects here and considers opportunities for activity expansion.
Power balance
The total volume of consumption of primary energy resources of Latin America is rather small – 809.8 million tons of oil equivalent in 2016. It is in 2.8 times less than a similar indicator of the USA (nearly 2.3 billion tons of oil equivalent) and on 3.8 times than in China (about 3.1 billion tons of oil equivalent). Meanwhile for the last decade consumption of energy resources in Latin America grew more than on a quarter.

The key role in power balance of Latin America is occupied with oil (47%), natural gas (26%) and hydraulic power (18%). Only 5% and 1% respectively is a share of coal and nuclear energy. Thus in the region the noticeable increase in a role of the unconventional renewables is observed, though their share in power balance does not exceed 3%.

Reference: The total amount of the electric power made in Latin America made 1627 terawatt-hour following the results of 2016. In electric generation the main role is played by hydroelectric power stations (54.4%) and also thermal power plants on natural gas (23.3%) and oil processing products (10.5%), first of all on fuel oil and diesel fuel. Other shares are distributed between the stations burning coal (5.4%), bio fuel and waste (3.3%), as well as nuclear fuel (2.1%). Despite still small part of solar and wind energy (0.3%) in recent years these sources of electric generation show the highest growth of rates in a number of the countries of Latin America, first of all in Uruguay, Chile and Brazil, partly in Argentina.

In general the Latin American region is provided with own energy resources. So, explored reserves of oil of Latin America reach 51.9 billion tons (on this indicator the region concedes to the Middle East only), gas – 7.9 trillion CBM, coal – 15.5 trillion tons. But possessing such resources, Latin America, to be exact, many Latin American countries, actually suffer a certain power deficiency.

Reference: Annual oil production in Latin America makes about 506 million tons and its consumption — 409 million tons. Production of coal is 72.1 million tons a year at consumption of 44.5 million tons. At the same time it is extracted annually only a little more than 224 billion cubic meters of natural gas, whereas over 261 billion cubic meters a year are consumed.

The matter is that Latin America unites more than two tens large and small countries cardinally different from each other as on security with own stocks and degree of extent of exploration of resources and on the level of the economic, technological and technical development defining situation and a condition of their fuel and energy complex.
For example, Venezuela possesses the largest proved oil reserves — 47 billion tons — not only in the Latin American region (90.5% of total stocks) but also in the world (19.5%). However on production of black gold Venezuela takes in Latin America only the second place (124.1 million tons in 2016) after Brazil (136.7 million tons) which explored reserves of oil make only 1.8 billion tons. Thus Venezuela exports nearly 80% of the extracted oil and Brazil to provide the requirements (138.8 million tons in 2016) is compelled to import black gold.

Besides Brazil and Venezuela, the largest oil-producing countries of Latin America are Mexico (121.4 million tons in 2016) and Colombia (48.8 million tons). They completely provide themselves with own oil and they are large regional exporters of black gold, though cannot boast a very large explored reserves of oil which make only 1.1 billion tons and 300 million tons respectively today.

The proved reserves of natural gas of Latin America (7.9 trillion CBM) are rather small. First place in the region on explored reserves of gas is also won by Venezuela – 5.7 trillion CBM or more than 72% of total stocks of the region. The largest gas states of Latin America today are Mexico (47.2 billion cubic meters in 2016), Argentina (38.3 billion cubic meters) and Trinidad and Tobago (34.5 billion cubic meters). Venezuela takes only the fourth place on an indicator of production of gas (34.3 billion cubic meters). Thus explored reserves of natural gas of Argentina make 400 billion cubic meters, Trinidad and Tobago — 300 billion cubic meters and Mexico — 200 billion cubic meters.

As for consumption of natural gas, remain leaders in this indicator in Latin America are Mexico (89.5 billion cubic meters in 2016), Argentina (49.6 billion cubic meters), Brazil (36.6 billion cubic meters) and Venezuela (35.6 billion cubic meters) though all these countries are compelled to buy import gas for satisfaction of own requirements today.

Gas sector
According to the Director of representation of PAO Gazprom in Brazil Shakarbek Osmonov, it is necessary to divide the countries of Latin America into some groups depending on development of the local gas market. Large producers and at the same time importers of gas treat the first of them, such as Brazil, Mexico, Argentina and Venezuela which have infrastructure and other problems without which solving it is impossible to satisfy domestic demand due to own production. In 2016 purchases of natural gas by these states abroad made respectively 13.4 billion cubic meters and 44.4 billion cubic meters, 11.3 billion cubic meters and 1.3 billion cubic meters. In foreseeable prospect they, it is possible except for Venezuela, will remain dependent on gas import.

Meanwhile the listed countries have considerable potential for increase in own gas production. In Brazil it is connected with existence of significant reserves of natural gas on subsalt fields of a continental shelf, in Argentina — with the huge taken nonconventional resources, first of all in a geological formation «Waca-Muerta» (Vaca Muerta). Mexico and Venezuela have opportunity to develop own gas production both on the land and on the shelf. Thus the authorities of Brazil, Argentina and Venezuela declare achievement already in medium-term prospect of self-reliance gas of the countries. Mexico also expects to develop the gas industry, but in parallel to import rather cheap gas on available and to gas pipelines under construction from the USA.

The second group includes large producers of gas which domestic market insufficiently capacious or is in embryo that compels them to direct considerable volumes of the made natural gas on export. It includes the Republic of Peru exporting the liquefied natural gas within the Kamisea project (Camisea), Trinidad and Tobago — the largest liquefied natural gas exporter in the Latin American region since 1999 and also Bolivia sending the largest part of the extracted gas for export on pipelines to Brazil and Argentina.

Reference: Explored reserves of natural gas in Peru make 400 billion cubic meters, gas production in 2016 reached 14 billion cubic meters, having increased over the last 10 years almost by eight times. At the same time consumption of natural gas grows in the country considerably smaller rates — since 2006 it increased on 4.4 times and made in 2016 7.9 billion cubic meters (56.4% of output). At the same time the level of  production of gas to Trinidad and Tobago falls — since 2010 it was reduced on 10.3 billion cubic meters or on 23% whereas internal consumption of natural gas decreased on 4.2 billion cubic meters, or on 18% — 19.1 billion (55.4% of output). Gas production in Bolivia which proved stocks are estimated at 300 billion cubic meters, decreased since 2014 on 6.2% — to 19.7 billion in 2016, and internal consumption of natural gas — on 5.8%, to 3.5 billion cubic meters (17.8% of output). The remained 16.2 billion cubic meters of gas are exported on gas pipelines to Brazil (10.4 billion) and Argentina (5.8 billion).

Today the question of completion of the exhausted reserves of natural gas is particularly acute for Trinidad and Tobago and Bolivia. It is especially urgent for the last one as in 2019 terms of the existing contracts for delivery of gas to Brazil come to the end and in 2026 — to Argentina. And their extension on the acceptable conditions of Bolivia requires existence of sufficient volumes of the proved stocks.

The third group includes the countries — importers of natural gas which possess a certain potential for participation in development of regional gas integration. First of all it is such net importers of gas as Uruguay and Chile. Thanks to the geographical position and the available infrastructure in the future they can play not the last role in expansion of the gas market of Latin America and activization of trade in natural gas in the region. First of all it is about several existing gas pipelines and also about the power lines connecting Argentina with Chile and Uruguay to which neighboring countries Brazil can be connected, Peru and Bolivia.

Reference: There is no own gas production in Uruguay — the country receives insignificant volumes of natural gas on system of gas pipelines from Argentina. In addition, Uruguay conducts negotiations with the Anglo-Dutch Royal Dutch Shell on renewal of construction of the regasification terminal near Montevideo. It is planned that the part of the liquefied natural gas accepted here will be delivered after processing on new power plant as fuel, and surplus of the imported gas is supposed to be re-exported to Argentina and other countries of the region.

Production of gas in Chile makes only about 0.5 billion cubic meters a year that is obviously not enough for satisfaction of needs of this country for natural gas. Import of gas to Chile is carried out via two regasification terminals, two more liquefied natural gas terminals are under construction. In 2016 the Republic of Chile bought abroad 4.3 million tons of liquefied natural gas, thereof 3.2 million tons were imported from Trinidad and Tobago, 0.7 million tons — from the USA. The liquefied natural gas terminals which are under construction in the country are focused on gas import mainly from the United States. Besides, Chile is connected by four gas pipelines to Argentina on which till 2008 the Argentina gas was imported. Now only one of these gas pipelines is periodically used and that in the reversed mode — gas from the Chilean regasification Quintero terminal (Quintero) is re-exported to Argentina. In 2016 on this way passed about 0.4 billion cubic meters of natural gas. In the course of strengthening and expansion of regional gas integration of Latin America in the long term the most northern of the Argentina-Chilean gas pipelines can be connected to the gas transmission system on which today the Bolivian gas is delivered to Argentina.

Nonconventional resources
Latin America has very considerable nonconventional reserves of oil and gas. But only Argentina achieved serious progress in their development. According U.S. Energy Information Administration (EIA), Argentina and Mexico take respectively the second and sixth places in the world on technically taken reserves of slate gas and the fourth and eighth — on slate oil. 18.5% and 11.5% respectively of the entire world technically taken resources of slate hydrocarbons account for a share of these countries.

Now active work on development of nonconventional resources of oil and gas in Latin America is carried out mainly by Argentina where the well-known formation of nonconventional Waca-Muerta hydrocarbons in the province Neuquen is located. And it is not accidental — until recently work on development of nonconventional resources was concentrated here on oil production, however thanks to development of this and adjacent formations Argentina could stop the falling of production of gas proceeding since 2004. And in 2016 in the province Neuquen the general growth of production of natural gas on 7.91% was recorded.

Besides, according to the Argentina institute of oil and gas, due to development of a formation Waca-Muerta Argentina is capable to double gas production volumes that will allow the country providing internal energy needs within the next five years. However investments of not less than 100 billion dollars for this purpose will be required.
It is clear that in such a situation development of fields of nonconventional hydrocarbons takes a special place in strategy of development of Yacimientos Petrolíferos Fiscales (YPF) national oil company of Argentina. For the same reasons now in the province Neuquen, besides YPF, about 70 companies already work, including transnational. And the government of Argentina seeks to increase in every way investment appeal of development of the Argentina nonconventional resources. Especially as technically taken reserves of slate oil and gas, by the existing estimates, are located not only in the Argentina oil and gas bearing basin Neuquen but also in Golfo San Jorge’s basins, Austral and Parana. The last two Argentina shares with Chile (from the Argentina party is Austral, with Chilean is Magalyanes) and also (Parana) with Paraguay, Brazil, Uruguay and Bolivia. In the first of them YPF in small volumes is already engaged in development of nonconventional resources, serious exploration was not carried out in the territory of the second one.

Meanwhile, except Argentina, in Latin America only Chile is seriously engaged in development of resources of slate gas. Development of nonconventional resources of hydrocarbons is carried out in the southern Patagonia — in the extreme South of the country, in the oil and gas bearing basin Magalyanes.

According to EIA, the general geological reserves of slate Chile gas make 1.7 trillion CBM, thereof only 300 billion cubic meters belong to the category of technically taken stocks. The leading role in development of nonconventional resources of hydrocarbons belongs to the Chilean national oil company Empresa Nacional del Petróleo (ENAP). All extracted slate gas which volumes reached in 2016 1 million cubic meters per day (365 million cubic meters a year) is realized to local consumers in the south of Chile.

In 2016 ENAP signed an agreement with the American company ConocoPhillips on creation of joint venture for development of nonconventional reserves of the gas which is in the pool Magalyanes of the Kayron block (Coiron) in which the last received a share in 49%. And in 2017 ENAP began drilling of the first horizontal wells with use of hydraulic fracturing of layer on the main «nonconventional» mining Arenal block (Arenal). Till 2020 ENAP plans investing about 1.4 billion dollars in projects on development of reserves of slate gas. Thus plans of supply of natural gas even to other regions of Chile (not to mention export) at this stage are not available due to the lack of necessary infrastructure.

Process of development of nonconventional resources in other Latin American countries is in embryo. For example, Brazil in 2013 held the special tender directed on distribution of the overland prospecting blocks, perspective on availability of nonconventional hydrocarbons. But his winners could not even begin the required works as the Brazilian judicial authorities under pressure of ecologists forbade their carrying out until safety of application of the hydraulic fracturing of layer technologies is proved. Attempts of use of such technologies in Colombia, Mexico and some other countries of Latin America also face active protests of the local public.

As for Venezuela, the potential of development of nonconventional resources of hydrocarbons of this country is huge. First of all it is about the Orinoksky oil and gas bearing basin in which subsoil enormous reserves of heavy high-viscosity sour oil and also oil bituminous lie. There are essential resources of casing-head gas. Let us remind that about 90% of explored reserves of gas of Venezuela (total amount is 5.7 trillion CBM) are made by casing-head gas, the Venezuelan fields of «purely» natural gas are in the basic on the shelf of this country.

Works on development of resources of an oil-and-gas Orinoco belt, in which active part took also the Russian companies (including Gazprom Group and Gazprom Neft), began in the middle of the 2000s. It is obvious that development of so difficult reserves of hydrocarbons demands consolidation of financial, technical and technological potential at the international level. However destabilization of an economic, and then and political situation in Venezuela against a global economic crisis actually led to a freezing of key projects in the country, first of all the nonconventional resources of hydrocarbons concerning development. Respectively, today the future of development of resources of oil and gas of the Orinoco belt remains extremely uncertain.

Gas motor fuel
The sector of use of natural gas on transport actively develops a number of the countries of Latin America. And some of them take on this direction the leading positions in the world. First of all it is Argentina and Brazil which together with China and Pakistan are the largest players in this segment of the global market. So, Argentina wins the first place in Latin America on the number of the cars using gas motor fuel and there are over 2 million of them in the country. About 1.8 million cars in Brazil work now on gas motor fuel. The sector of gas motor fuel and Colombia where over 550 thousand cars on gas and about 790 gas-filling stations (for comparison: it is about 2000 of them in Argentina). Thus it is necessary to notice that only for the last four years about 250 thousand Colombian cars were converted on gas.

The considerable attention is paid to use of gas as motor fuel in Bolivia and Peru. The authorities of these countries purposefully create incentives for development of gasification of transport thanks to what the park of cars on gas of Bolivia makes nearly 360 thousand units today, Peru — more than 214 thousand.
At the same time in recent years in Latin America decrease in rates of development of gas engine sector is observed. It is connected with consequences of a global economic crisis which has pernicious effect on all countries of the Latin American region and also with present not really favorable environment of the world energy market.

The liquefied natural gas
Recently Latin America began playing a noticeable role and in liquefied natural gas trade, and both on export, and on import the directions. Only two Latin American countries — Trinidad and Tobago and Peru are among exporters of the liquefied natural gas today. They have capacities for liquefaction of 14.8 million tons and 4.45 million tons of gas in a year respectively. Besides, the question of construction of floating liquefied natural gas plant on the shelf of Brazil is discussed.

Reference: Rated capacity of regasification terminals in the region makes 46.9 million tons a year. Including three liquefied natural gas terminals located in Mexico (with a general annual productivity 16.7 million tons) and Brazil (11.7 million tons), two in Argentina (7.6 million tons) and two in Chile (4.2 million tons), and also one in Dominican Republic (1.7 million tons) and Puerto Rico (1.2 million tons). At the end of 2016 came the first regasification terminal into service on the Atlantic coast of Colombia with a power of 3.8 million tons a year which in the middle of 2017 accepted the first part of liquefied natural gas.

In the next years a number of the Latin American countries plan to construct additional infrastructure for reception and regasification of liquefied natural gas mainly for electric generation. The main driver of plans for construction of new power plants on import gas is need of ensuring stable work of national power systems. Today in the majority of the countries of Latin America the leading role is played by hydropower. At the same time the importance of wind and solar electric generation increases. In these conditions thermal power plants on import gas are considered as the mechanism for ensuring stability of a power system during the periods of peak loadings and adverse (for generation gidro-, wind-and solar energy) the climatic phenomena.

The most active measures for construction of new regasification capacities are developed in Brazil. It is connected with plans of the country for commissioning in the closest decade of new power plants on natural gas with a total productivity of 5 GW. Taking into account shortage of own gas the most part of the available construction projects of power plants provide use of import liquefied natural gas. Therefore the authorities of Brazil considered necessary to bring the number of regasification terminals in the country at least to seven by the end of the 2020s.

From other countries of Latin America plans for implementation of construction projects of new regasification terminals have Chile (two liquefied natural gas terminals), Colombia (the second terminal on the Pacific coast) and Uruguay (conducts negotiations with Royal Dutch Shell on renewal of construction of the regasification of liquefied natural gas del Plata terminal). Options of creation of infrastructure for reception of liquefied natural gas and some other Latin American countries, including the states of Central America and the Caribbean Region are considered.

If to speak about Venezuela, in 2008 it signed agreements with a number of the international investors on creation of three joint ventures for construction of liquefied natural gas plants along the northern coast of the country. Originally their start was expected in 2014. But, considering the developed economic and political situation, implementation of these projects was postponed for indefinite time.

Low-tonnage liquefied natural gas
In recent years in Latin America the direction of production of low-tonnage liquefied natural gas actively develops. One of such projects is realized in Chile where liquefied natural gas is delivered from the regasification terminal by specialized trucks tanks to Bio Bio oil refinery on the so-called virtual gas pipeline. The region of Bio Bio where oil refinery is situated has a huge number of portable regasification stations that allows distributing a part of import gas among other local consumers. Successful experience pushes Chile to construction in this region of 20 new such stations to increase the level of gasification of local consumers.

Other project on production of low-tonnage liquefied natural gas is realized in Bolivia — the plant on liquefaction of Rio Grande gas with a power of 200 tons per day is constructed here. The liquefied natural gas received here is delivered on «the virtual gas pipeline» to 27 remote settlements where it is regasified and distributed among local population. By 2021 it is planned to connect to «the virtual gas main» 33 more settlements in remote regions with the population of nearly 55 thousand people. Thus costs of functioning of «the virtual gas pipeline» are subsidized with the government that allows supplying local consumers to natural gases at rather low prices — a little more than 35 dollars for 1000 CBM.
Also small project on production of low-tonnage liquefied natural gas is realized in Argentina where near Buenos Aires the plant on liquefaction of gas with a power of 70 tons of liquefied natural gas a day is constructed. The raw materials on plant are delivered from the national gas transmission system. The received liquefied natural gas serves as fuel for the ferry plying between Buenos Aires and Montevideo.

The base for power expansion
The Gazprom group studies possibilities of development of business in Latin America long ago and has experience of direct work in the region. Now the base for power expansion of Group on the oil and gas market of Latin America is Bolivia. Today Gazprom through specialized subsidiary on realization of foreign upstream-проектов Gazprom International carries out the project on exploration and production of hydrocarbons on sites «Ipati» (Ipati) and «Akio» (Aquio) within which the Inkauasi field (Incahuasi) is opened. In September, 2016 industrial production of natural gas started on it. There is one more Bolivian project at the stage of geological exploration — studying of the oil-and-gas block of Asero (Azero). Partners of Gazprom Group in Bolivia are the Yacimientos Petrolíferos Fiscales Bolivianos national oil company and the French Total.

Prospects of development of cooperation of Gazprom Group with the countries of Latin America are rather great and not only with Bolivia and Argentina. Besides projects on exploration and production of hydrocarbons and also participations in gas generation and marketing of gas, the interesting directions are design and construction of underground gas storages, introduction of technologies of increase of return on mature overland gas fields, as well as production technologies of low-tonnage liquefied natural gas on joints of pipelines of high and low pressure here.

Besides, in Brazil the wide experience of development of offshore oil fields and gas is gained, the national companies making on own technological base irrespective of the American and West European companies almost complete set of the equipment of systems of underwater production are created. These companies express readiness at certain, quite acceptable conditions to localize production of this equipment in Russia and transfer of appropriate technologies to the Russian partners. This circumstance can be used at solving by Gazprom of the tasks connected with import substitution at implementation of offshore production gas projects in Russia. In this regard import substitution, as well as advance on the markets of the Latin American countries of technologies of the companies of Gazprom Group and also delivery to the Brazilian liquefied natural gas market from a Gazprom portfolio, could become a new direction of cooperation with the countries of Latin America.