Oil 35: A future to be redrawn

Oil 35: A future to be redrawn

Gianni Di Giovanni
A journey across Latin America's energy potential, through the horizon of development, new discoveries and big reforms. Oil 35, which starting June 20th will also be distributed with the daily publication "Il Foglio", focuses on the "Green Continent", looking at contradictions, virtues and growth opportunities

Read the Oil 35 magazine

The Rio Grande is both a physical and ideal boundary. From its banks, marking the southern end of what is conventionally referred to as Anglo-America, spreads a region that for centuries has almost exclusively been a land of conquest. From the injuries inflicted by the history of Latin America and extending over 42 million square kilometers, it has proudly resurrected itself. Its governments and institutions are currently seeking, albeit among thousands of contradictions, to bring about an epochal change that will support the beginning of stable development. The same territories are home to 20 percent of the world’s potential oil resources, which, as Moisés Naím states, represent both an energy “supply” and a hostage in a political context subject to continuous, unforeseen changes.
A common thread runs through the authors’ analyses in this issue of Oil as they focus on South American energy events, not only from a technical but also from a social and cultural perspective. Over the last twenty years, countries in the region, as Ramón Espinasa of the Inter-American Development Bank explains, have glimpsed the beginnings of global openness, granting state-owned oil companies greater operational independence and establishing clearer and more secure rules on non-public investments in the energy industry.
This is a change that Mexico has tenaciously pursued, as Mexico’s minister for Energy, Pedro Joaquin Coldwell, tells us.  But this historic reform is at risk of being thwarted, as Luis Serra remarks, by the outcome of the 2018 presidential elections.

Efforts to become ever greater

Further south, the critical situation of Venezuela, a country struggling amid deep civil dissatisfaction, is described in the chronicles of Francisco Monaldi and Paul Sullivan, a dissatisfaction that contrasts with oil and natural reserves that are unrivalled in the world and which could ensure the country a future of great prosperity. This is a continent that moves between extremes which see Evo Morales’ Bolivia, as pointed out by Deputy Foreign Minister Guadalupe Palomeque de la Cruz, favored by solid economic progress and committed to achieving its goal of becoming South America’s energy hub, focused not only on the gas export sector but also on the development of alternative energies. Equally impressive is former President Correa’s Ecuador, which, in 2013, received foreign investments amounting to approximately $703 million, one third of which was allocated to the "Pacific Refinery" project. This kind of effort is also being undertaken by Brazil, despite a strong ongoing recession and the possibility of legal punishment threatening institutional leaders. The country, as Lima de Oliveira explains, intends to assume an international role of authority and primacy, including in the energy industry, which it has been denied for too long. Recent political decisions relating to new concessions and the downsizing of the monopoly role of Petrobras, especially concerning the pre-salt fields, intend to promote that new primacy. Another major country is Argentina, which, with Macri’s accession to power, could soon put aside the economic hesitations, mainly linked to the fall in crude oil prices, which have so far hindered the exploitation of the major Vaca Muerta oil field.
Overall, it is a scenario in full "revolution," according to the best historic and civil tradition of this region. Upheavals have regularly traversed Latin American history, with contradictory outcomes.
But now a unique and irreversible growth objective has emerged, one that will give these populations an opportunity to compete against a past that was often subordinated to the rest of the world, but which can now turn to a future that finally presents an opportunity of redemption.