Downturn hits Latin America’s upstream hard

Worsening economic conditions set to slash oil production growth in the region

The Opec+ collapse is leading to an unprecedented wave of crude hitting the market just as demand plunges due to the Covid-19 pandemic. Latin American government revenues will take a big hit because of the outsized role that oil and gas plays in regional economies. As elsewhere, companies active in the region have reacted quickly, making deep cuts to their capital spend plans for this year, with discretionary spend being pulled back wherever possible. Current oil prices may not be sustainable beyond the short-term, but the focus for companies is to minimise cash burn and protect their balance sheets. Production will be hit, and short-term shut-ins have already begun. Longer-term growth will