Americas play increasing role in global energy trade
By Stephany Romanow
The major takeaway from the US Energy Information Administrations (EIAs) new Liquid Fuels and Natural Gas in the Americas report is that the Americas, including North America, Central America, the Caribbean and South America, are significant contributors to the global markets.
This region rivals the Middle East (ME) in oil production, and it is exceeding the former Soviet Union (FSU) in natural gas production. Key findings from the EIA country report are:
- US crude oil imports from Latin America are declining, but crude imports from Canada are increasing.
- Crude exports from other Americas countries are shifting to Asia-Pacific nations, especially China and India.
- From 2003 to 2012, US imports of crude oil from other countries in the regionprimarily from Canada, Mexico, and Venezuelaaveraged 5.01 million bpd (MMbpd).
- The US has become a net exporter of petroleum products, exporting 2 MMbpd to countries in the region (primarily Mexico and Canada) in 2012 compared to 0.6 MMbpd in 2003.
- In 2012, the countries of the Americas were the world's second-leading producer and consumer of liquid fuels, and leading producer and consumer of natural gas. Estimates of the region's reserves and resources indicate that the Americas will continue to increase production and consumption of liquid fuels and natural gas in the future.
- Intra-America trade accounted for 56% of the total crude imports and 73% of total crude exports for this region. Intra-American crude oil and petroleum products trade accounted for most of the total trade in the region.
- US petroleum product exports to Latin America are rising to meet growing demand. In Latin America, demand for refined products is outstripping domestic refining capacity. Intra-Americas trade accounted for 66% of total refined product imports and 86% of total petroleum products exports from this region.
- The Americas accounted for 20% of global natural gas trade, with imports and exports each totaling 6 trillion cubic feet (Tcf). More than 80% of natural gas trade was via pipeline to neighboring countries, with the remainder traded as liquefied natural gas (LNG). EIA expects natural gas exports from the Americas to increase as natural gas production increases, particularly in the US. Additional LNG export terminals will facilitate these exports.
- Regarding natural gas trading, the Panama Canals ability to handle larger ships is forecast to begin in 2015. The modernized and expanded canal will facilitate greater access to Asian markets from the Americas natural gas producers in the Atlantic basin.
- Openness to outside investment in the oil and gas industry varies across the nations making up the Americas. Recent production trends are more positive in countries with open investment laws and regulations.
- Future extraction, development, and commercialization of hydrocarbon resources in the Americas will be significantly influenced by national policies towards foreign investment. Mexico, which recently adopted new energy reforms to allow foreign private investment in the energy sector, will look to join countries with open investment structures, like Canada, Brazil, Colombia and the US.
- Chinas national oil companies (NOCs) are providing significant investment over the past five years for both crude oil supplies and physical assets such as refineries in the Americas.
Full executive summary
The recently published EIA report, Liquid Fuels and Natural Gas in the Americas, examines the major energy trends and developments of the past decade in the Americas. It focuses on liquid fuels and natural gasparticularly, reserves and resources, production, consumption, trade and investment. The Americas, which include North America, Central America, the Caribbean, and South America, account for a significant portion of the global supply, demand and trade of both liquid fuels and natural gas. Liquid fuels include all petroleum and petroleum products, natural gas liquids (NGL), biofuels and liquids derived from other hydrocarbon sources.
At the outset of 2013, the Americas region accounted for one-third of proved worldwide reserves of crude oil, at 536 billion bbl, and one-tenth of proved natural gas reserves, at 688 Tcf, as well as immense recoverable resources of oil and gas including reservoir resources, tight oil and shale gas.
In 2012, the Americas produced 29% of the worlds liquid fuels supply, at almost 26 MMbpd, and consumed one-third of the worlds liquid fuels, at nearly 30 MMbpd. Combined, the countries in the region imported and exported substantial volumes of both crude oil and refined petroleum products, accounting for 25% of global crude imports, 9% of global crude exports and 22% of global petroleum product imports and exports. The countries in the Americas imported 4 MMbpd and exported 3 MMbpd of refined petroleum products in 2012, much of which was exported from the US.
For much of the past decade, the US has been a major crude oil, petroleum product and natural gas trading partner with other countries in the Americas. From 2003 to 2012, the US imported about 5 MMbpd of crude oil from other countries in the regionprimarily from Canada, Mexico and Venezuela. However, the quantities and shares of imports from those countries are shifting. With US crude oil production continuing to increase, domestic production has displaced some imports of crude oil, including those from Latin America, defined as Mexico plus Central America, the Caribbean and South America.
The US has been a major petroleum product supplier to the Americas for the past decade, and its significance as a product supplier has grown considerably in recent years. In 2003, the US exported 0.6 MMbpd of petroleum products to other countries in the Americas, primarily Mexico and Canada. In 2012, US exports to the countries in the region totaled 2 MMbpd, still primarily to Mexico and Canada but increasingly to other countries, most notably Brazil and Chile. As a result, the US recently became a net exporter of petroleum products.
Refined product trade in the Americas has changed as demand in Latin America (the Americas excluding the US and Canada), including demand for cleaner, low-sulfur products, has grown faster than local refinery capacity. US Gulf Coast refineries are some of the most sophisticated and economic refining capacity in the world; they are well positioned to provide additional supply to meet growing demand in Latin America.
In 2012, the Americas produced and consumed about 31% of the worlds natural gas, both at 37 Tcf, while accounting for 20% of global natural gas trade in both imports and exports, totaling 6 Tcf. More than 80% of both natural gas imports and exports in the Americas were transported via pipeline to neighboring countries, while the remainder was traded within the region as LNG. The EIA expects natural gas exports from the Americas to increase further as natural gas supply, particularly in the US, continues to rise as shale gas production increases. Additional LNG terminals and the ongoing Panama Canal expansion, which will allow passage of larger LNG tankers, will further boost LNG exports in the Americas region.
Recognizing the abundance of hydrocarbon resources in the Americas and the availability of technical capabilities to produce them, companies within and outside of the region have invested heavily in developing and producing liquid fuels and natural gas. Both international oil companies (IOCs) and state-owned oil companies in the Americas have made the most substantial investments, followed by companies based in Europe and in Asia-Pacific.
Foreign investment in the region has been concentrated in those countries with legal and regulatory structures open to foreign involvement. Countries with the most open structures like Canada, Brazil, Colombia and the US have attracted significantly more investment than others in the region. Mexico, which recently adopted new energy reforms that allow some types of foreign private investment in the energy sector, looks to join their ranks.
Asian investment in the region has risen dramatically in the past five years, in particular, investment by Chinas NOCs to secure both crude oil supplies and physical assets, such as refineries, especially in those countries considered to have more restrictive foreign investment laws and regulations.
The Americas region holds an abundance of existing proven reserves, as well as the promise of abundant resources of both oil and natural gas. While the Americas have accounted for a considerable portion of the global markets in liquid fuels and natural gas and have attracted sizeable investments, the region has the potential for further expansion and development.
The full report can be access from the EIA's website.