Gas production is dwindling in Latin America at a time when the world needs the resource the most. But this could be an opportune time for Guyana – the South American country with big reserves that is laser-focused on being a gas export hub for the Caribbean.
According to a new report from Wood Mackenzie, natural gas supply in Latin America will be unable to keep up with rising demand over the next decade, driving the need for expanded imports to the region.
The report predicts that natural gas demand in the region will increase by an average of 1.4% per year, stabilising at around 25 billion cubic feet per day (bcfd) by 2035. However, the supply of gas is expected to decline at a rate of 5.6% in that same time frame, leading to a significant shortfall.
Adrian Lara, the principal research analyst for Latin America upstream oil and gas at Wood Mackenzie, stated, “We forecast that supply will be unable to close the gap with increased demand. This could potentially be mitigated with new gas developments or yet-to-find resources, but there are significant challenges with infrastructure restrictions and unfavourable exploration incentives. The likely result will be a steady increase of imports in the region.”
The report suggests that to meet the growing natural gas deficit, imports could range between seven to 12 bcfd by 2035. In 2022, net imports were 4.9 bcfd, and Wood Mackenzie’s 2023 forecast projects 5.2 bcfd.
The Wood Mackenzie report highlights that the Latin American region has significant contingent resources that can help alleviate the shortage of natural gas supply. The report also suggests that despite the challenges facing new gas developments, there may be opportunities for investment in the region’s energy infrastructure.
This is where Guyana comes in. Though only producing oil for under five years, the country has racked up a gas reserve of over 17 trillion cubic feet. It has planned a Gas-to-Energy project that would utilise 50 million cubic feet per day from the Liza field to serve its energy needs with a 12” pipeline at first. Guyana is shooting to produce upwards of 100 million cubic feet daily.
The rest is what Guyana intends to use to become a gas hub for the Caribbean.
The country is even considering a second pipeline because of its growing reserves. And there are much more gas resources to be unlocked.