Venezuelan revival and sweet crude expansion reshape LatAm flows

The Latin American crude supply landscape is undergoing a structural expansion, driven by Venezuela's post-sanctions reactivation, Guyana's steady offshore production ramp-up, and big bets on Argentina's shale play. The continent is set to add significant volume to Atlantic Basin supply, at a time when reliable flows are paramount.

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Key Takeaways

• Venezuelan production recovery: Venezuelan output is approaching 1.3 mbd in August, targeting 1.4 mbd by year-end, supported by a fiscal take reduction from 83% to 20–35% and major foreign corporate re-entry (SLB, Hunt Oil, Chevron, Eni). However, structural power grid deficits remain the primary bottleneck.
• Guyanese export milestones: Guyana's exports are on track to breach the 1 mbd mark by year-end, with July's exports hitting a new all-time high.
• Argentina shale investment: Established shale players and technology giants alike are eyeing operators in the Vaca Muerta shale formation.

Venezuelan crude and condensate output is currently hovering near 1.3 mbd, up approximately 450 kbd compared to December levels, with state producer Petróleos de Venezuela (PDVSA) targeting 1.4 mbd by year-end.

A sweeping fiscal overhaul that reduced government take on crude projects from 83% to 20–35% has triggered a wave of corporate re-engagement. Chevron's JV output has risen 15% over six months to 280 kbd, while majors and service providers including SLB, Hunt Oil, BP, Eni, Halliburton, Maurel & Prom, and the Oil and Natural Gas Corporation (ONGC) are sealing new operational and framework agreements.

This recovery is directly plugging supply gaps in the market. July exports hit near all-time highs, with sales to Asia rebounding amid escalating tensions in the Middle East. Flows to the US remain high as well, with the US exporting around 100 kbd of naphtha to Venezuela to support diluent needs, reinforcing the upward supply trajectory.

Simultaneously, Guyana continues its upward production trajectory. July exports reached an all-time high, and the rapid production growth suggests that the 1 mbd mark could be breached later this year, as the 250 kbd Uaru project ramps up in Q4. At the same time, Guyanese crudes have started featuring more prominently in Asian refiners' slates since the start of the war, perhaps marking a structural shift.

Guyana crude oil exports by destination continent, kbd

Source: Kpler

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Argentina's Vaca Muerta shale play, meanwhile, is attracting significant foreign capital and top-tier US independents as free-market reforms and tax incentives reshape the exploration and production (E&P) landscape.

Venture capitalist Peter Thiel has acquired a 1% stake in a company operating in the Vaca Muerta that is expanding operations alongside supermajors such as Chevron, which is scaling up acreage under new fiscal incentives. Concurrently, US pioneer Harold Hamm's Continental Resources is expanding its footprint by competing for 15 shale blocks in Neuquén Province's 19 August auction and by purchasing half of an Argentinian shale oil firm owned by Mercuria Energy.

Accelerating upstream deployment has pushed Argentina's crude oil output to an all-time national high of around 885 kbd in May, a 19% yoy surge.

Vaca Muerta is the primary growth driver, producing more than 1 mboe/d and accounting for 70.6% of domestic crude output. This volume surge has elevated Argentina above Colombia as Latin America's fourth-largest crude producer. Simultaneously, the country's abundant natural gas supply will act as a low-cost, baseline power source for digital infrastructure and efficiency gains in the shale patch.

There is perhaps one eye on the medium term too, given the extended Middle Eastern conflict and a growing structural reliance on Brent-linked crudes from the Western Hemisphere. Reflecting this, recent trade data showed bidding interest in the Q4 Brent-Dubai structure, pointing to a medium-term demand pull that could centre on the Atlantic-origin crudes. While flat prices and structure have inched higher, the shifting supply trends are perhaps reflecting in stronger deferred Brent-Dubai pricing.

M1 Brent-Dubai EFS vs M3 Brent-Dubai EFS, $/bbl

Source: Argus Media

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