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At the recent gathering of BRICS nations in Brazil, the members’ joint statement contained an interesting assertion. BRICS leaders said that, while recognizing the need for an energy transition, they “acknowledge fossil fuels will still play an important role in the world’s energy mix, particularly for emerging markets and developing economies.” Luckily for BRICS members, they tend to be rather rich in such fuels.

A lot of these developing economies are in South America—which also happens to feature some sizable oil and gas resources, especially in this year’s BRICS host Brazil, fellow member state Venezuela, as well as the hottest oil destination right now, Guyana. Then there is also Argentina, which is home to what many describe as the world’s second-largest shale play and can’t wait to make it work for its energy security and export reputation.

Brazil is the largest oil producer in South America, and a sort of legacy focus of oil companies’ attention. The presalt zone in its continental shelf that has drawn Big Oil to tender after tender solidified its position as a leader in the industry. Yet Brazil has been having trouble expanding its oil output as many large fields mature and depletion begins to accelerate. So, despite his vocal stance in defence of wind and solar energy, and the transition, President Lula da Silva recently greenlit an environmentally controversial drilling campaign in the Foz do Amazonas basin—and a new refinery.

Brazil last year updated its reserve estimates, now seeing its proven oil wealth at some 16.8 billion barrels as of 2024, which was up 5.92% on the previous year. The reserve replacement rate in the biggest South American oil producer was also exemplary, at over 176%. Still, Brazil wants to be a net-zero country by 2050 and reduce its emissions by between 59% and 67% by 2030—but not without exploiting this oil wealth.

While Brazil’s neighbor to the north struggles under the weight of U.S. sanctions despite being home to the world’s largest crude oil reserves, tiny coastal nation Guyana is thriving thanks to its piece of the global oil pie. Once upon a time, among the poorest countries on the continent, Guyana is now one of the largest oil producers there—and about to become even larger as Exxon and its partners in the Stabroek Block expand their activity in the area.

Guyana is producing over 630,000 barrels of crude daily right now, with Exxon, the operator of its only producing block, eyeing a production rate of 1.3 million barrels daily by 2030. Meanwhile, Guyana has become the fifth-largest oil exporter in Latin America, after Brazil, Mexico, Venezuela, and Colombia. With Colombia firm on its path to decarbonization through stifling its oil and gas industry, chances are Guyana won’t stay fifth for very long, since its own government is quite happy to take advantage of the natural resources it has.

Then there is Argentina, home to the Vaca Muerta, or Dead Cow, formation, where crude oil production surged by 26% over the first quarter of this year and gas production rose by 16%. The rate of production growth clearly shows the resilience of hydrocarbon demand that many have recently dismissed in favor of peak oil and gas within the next five years. It also shows how determined Argentina is to catch up with its already big-producer neighbors.

The Vaca Muerta was producing oil at a rate of 447,000 bpd as of March, per Rystad Energy, which, while quite a bit less than Guyana’s total, is still a solid number that is set to rise further as more international energy majors are drawn to Argentina’s energy resources. The latest: Italy’s Eni, which sealed a preliminary deal with Argentina’s YPF for an LNG project that will source its gas from the Vaca Muerta play.

International majors in general appear to be quite attracted to South America right now, the Wall Street Journal reported this week. This is especially true of U.S. supermajors with large shale footprints as shale plays begin their long journey to depletion. It makes sense for Exxon and Chevron to look to South America; the WSJ reports that the continent would drive 80% of global oil production growth outside of OPEC over the next five years.

So that’s why the U.S. supermajors signed up for Brazil’s Foz do Amazonas tender earlier this year, and that’s why Chevron wants to buy Hess Corp, which is Exxon’s partner in the Stabroek Block—and Exxon would rather take over Hess’s stake in the block itself. In the meantime, it won the right to drill in 10 of the blocks that Brazil tendered in June.

It seems South American oil producers would continue to draw attention and capital, offering lower production costs than in other geographies, per the WSJ, and, perhaps more importantly, less conflict. As a bonus, South American oil generates lower emissions overall, which has become important for oil operators sensitive about their reputation among climate-oriented shareholders.

By Irina Slav for Oilprice.com