A bold statement: Latin America's oil landscape is evolving, and the return of Venezuela's oil might not be the game-changer many expect.
Argentina, Guyana, and Brazil are set to dominate the region's oil production growth in 2026, despite Venezuela's potential comeback. While the supermajors remain cautious about long-term investments in Venezuela, smaller players are eyeing short-term opportunities, indicating a potential shift in focus.
But here's where it gets controversial... Legal uncertainties and institutional challenges persist in Venezuela, but recent reforms, including the lifting of sanctions, are attracting more interest. Rystad Energy's analysis predicts that flagship projects in Argentina, Guyana, and Brazil will continue to outshine Venezuela, adding over 700,000 barrels per day to production, at least until 2030.
In the short term, Venezuela could bring an additional 300,000 bpd to the market, but the likelihood of diverting investments from these established leaders to Venezuela's uncertain environment is limited.
A Venezuelan oil industry revival will be a costly and lengthy process, and the region's big three seem unmoved by the estimated near-term return of Venezuelan crude. Oversupply, whether from Venezuela or Iran, is the real test for operators' financial resilience.
Radhika Bansal, Vice President of Oil & Gas Research at Rystad Energy, highlights that oversupply is the true challenge, impacting operators who would otherwise benefit from a revived Venezuelan oil industry.
Investment in Latin America is expected to rise in 2026, but the volume of conventional reserves being put into production will be 45% smaller than last year, indicating a focus on projects with guaranteed returns. Final investment decisions were low in the region last year, and this trend is expected to continue in 2026.
The region's oil production is forecast to exceed 8.8 million bpd this year, driven by the big three. Brazil, in particular, will be the primary growth engine, with production exceeding 4.2 million bpd, thanks to its pre-salt developments and cost-competitiveness.
The shale sector is the real catalyst for accelerated investment, with Argentina's shale growth expected to reach nearly $11 billion this year. The offshore deepwater sector is also expected to attract $42 billion in investment in 2026, an increase of 7.7% from the previous year.
For Venezuela, smaller players are drawn to license-enabled access, which reduces upfront costs and provides an opportunity to supply US Gulf Coast refiners with heavy crude at attractive prices. However, long-term projects in offshore Brazil, Guyana, and Suriname remain economically viable and are anchored by competitive breakeven prices.
If oil demand remains strong until 2035 and the impact of underinvestment is felt, Venezuelan barrels could become more significant. Making long-term, economically rational choices now could make Venezuelan oil production viable in a higher-priced environment. However, Venezuela's extra-heavy, emissions-intensive oil poses persistent challenges.
Outside the big three, countries closer to Venezuela may develop unique relationships in an open E&P market. Trinidad and Tobago, for instance, could supply Venezuelan offshore gas to their LNG trains, while Colombia may face capital and labor competition due to its limited oil development opportunities.
This analysis by Rystad Energy highlights the complexities and opportunities within Latin America's oil industry. It invites discussion on whether Venezuela's return will truly dethrone the region's oil leaders and the potential impact on the global energy landscape.
