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Energy in Latin America

Reacting to the fossil fuel shock

The oil price bust will force a re-appraisal of energy production, trading, and investment decisions right across the continent. In March, a month in which oil prices had roughly halved to around US$30 a barrel, Ruaraidh Montgomery, an analyst at oil research company Welligence, told Reuters news agency that “Latin America’s flowing production is over 7m barrels per day. At current prices, we estimate that half is non-economic, taking into account all costs, including transportation and taxes”.  Most of the region’s production is composed of heavy crudes, which have experienced sharp demand and price falls. According to projections, global demand for heavy crudes will fall by 10% or more in 2020.

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