Latin America is rich in oil. It has 132 billion barrels of ‘proven’ reserves. The US sources much of its oil supplies from the region. ‘Venezuela, Brazil, Mexico, and Ecuador have significant reserves and strong state involvement in the exploration and production of oil through their nationalized companies Petróleos de Venezuela (PdVSA), Petrobras, Pemex, and Petroecuador, respectively.’

In Brazil, there are new and ‘stricter tax framework.’ The country has also instituted ‘more aggressive terms with foreign companies around the country’s new-found offshore oil.’ A new state-owned company named Petrosal is tasked to give licensing, while mandated to ‘award some exploration and production rights straight to Petrobras without options for foreign firms.’

In Mexico, the state ‘intervenes in the market to maximize domestic job provision.’ A new law increases ‘local content in the Mexican energy industry to 25%.’

In Venezuela, a new law allows ‘PdVSA to expropriate oil and gas assets from foreign companies, who were refusing to work until a backlog of receipts were paid (PdVSA owes around $12 billion to foreign contractors).’

In Ecuador, ‘30,000 indigenous peoples have filed a lawsuit against Chevron for environmental damage in Lago Agrio,’ demanding $27 billion in additional compensation for the oil spills. The massive case is endorsed by the Ecuadorian government.

The newfound oil nationalism in Latin America reeks of protectionism. And because Latin America is the ‘energy partner of choice for the United States, both the government and the U.S. oil majors will now have to work a little harder to stay there.’

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Via Foreign Policy in Focus