28 March 2018, Sweetcrude, Lagos — Over $10.2bn in capital expenditure (CapEx) will be spent by South America-focused operators on gas projects during 2018 to 2021, to ensure that region’s production will remain around 17.3 billion cubic feet per day (bcfd) in 2021, according to GlobalData, a leading data, and analytics company.
Over 10.7 bcfd will be produced by conventional gas projects, while unconventional gas projects will contribute 1.9 bcfd to South American production in 2021. Conventional, unconventional, and heavy oil projects will contribute 3.9, 0.4, and 0.3 bcfd of associated gas, respectively.
Petrobras will drive South America’s gas production with 21.1 percent share of all production in 2021. Petroleos de Venezuela SA and YPF SA follow with 20.0 and 10.1 percent, respectively. South America has 16 key upcoming gas projects, of which 14 will be producing by 2021. Petrobras will lead in greenfield gas projects, with participation in seven upcoming projects in the near future. Repsol SA and Yacimientos Petroliferos Fiscales Bolivianos follow with three projects each. YPF SA has the largest number of producing unconventional positions with 13 in total and 3 new pilot projects.
South America is expected to spend $10.2bn as capex on conventional and unconventional gas projects during 2018 to 2021, with spending topping in 2018 at $4.5bn. Average full cycle capex per barrel of oil equivalent (boe) for South America gas projects is $8.3. Unconventional gas projects have full-cycle capex of $9/boe, while conventional gas projects need $8.2 per boe in full cycle capex.
Ultra-deepwater projects have an average full cycle CapEx of $13.5 per boe, followed by deepwater, shallow water and onshore projects with an average full cycle CapEx per boe of $10.8, $10.3 and $6.6, respectively. New conventional gas projects average $10.7 per boe in full-cycle capex, while new unconventional projects average $14.3 per boe.
Average development break-even price for gas projects in South America is about $7.5 per thousand cubic feet (mcf). Onshore projects require a gas price of $7.9 per mcf to break even, while the deepwater and shallow water projects have a development break-even price of $6 per mcf each. Ultra-deepwater projects require a gas price of $5 per mcf to break even.