WoodMac: Five themes shaping Latin America’s upstream landscape this year

Latin America's upstream sector faces growing geopolitical complexity that could reshape investment, Wood Mackenzie said. The firm outlined five themes expected to shape the sector in 2026.

Brazil, Guyana, Argentina counter regional decline 

Through 2026, Brazil, Guyana, and Argentina are expected to lead oil production growth outside of OPEC+, Wood Mackenzie said. The countries are expected to collectively increase production by over 780,000 b/d this year, offsetting production declines from other Latin American nations. 

Brazil is making progress on its floating production storage and offloading (FPSO) projects, Guyana continues its growth trajectory, and Argentina’s strong well performance demonstrates the need for major infrastructure expansion to reach its target of 1 million b/d unconventional production by the early 2030s, the firm said. 

Brazil, Guyana, and Argentina benefit from exceptional project economics that remain competitive, Wood Mackenzie continued. 

New frontiers

Petrobras will proceed with the controversial Foz do Amazonas Basin development despite environmental concerns. The Morpho project has secured IBAMA approval and government backing, and drilling is under way and should finish during this year’s first quarter, Wood Mackenzie said.

As major presalt field begin to decline, Brazil needs the expansion to sustain oil production above 5 million b/d beyond the 2030s.

Major operators hold all offshore blocks in Uruguay, and companies have committed US$130 million for initial exploration. 3D seismic surveys are expected to continue this year. APA's exploratory well will follow in late 2026, the country’s first since 2017. Even with successful exploration, production will likely remain elusive until the 2030s, Wood Mackenzie said.

Mexico’s unconventional potential

Based on official reports from the Energy Ministry, Mexico sits on an estimated 64 billion boe in unconventional resources, Wood Mackenzie noted. The untapped resource would be critical to increasing production and reversing the country's declining oil and gas output. 

Pemex currently holds 23 blocks with unconventional potential and has launched a US$327 million program to drill 7-10 wells in two priority areas, Wood Mackenzie said, noting its expectation that the Pimienta and Eagle Ford formations could lead development as their subsurface characteristics are better understood. 

Critical conditions must be met for this development to succeed, Wood Mackenzie continued. Pemex requires a substantial influx of investment and specialized operators to unlock cost-efficient production capabilities, as it noted Pemex cannot achieve these challenging targets alone by 2030. 

2026 Latin America FIDs

Final investment decisions (FIDs) in Latin America are systematically delayed, similar to other regions worldwide, but in some countries, the delays stem more from above-ground issues than technical challenges, Wood Mackenzie said.  

Brazil represents a mixed picture that's crucial for the region: as Latin America's production leader, contracting strategies for production units have become pivotal in its upstream segment. Petrobras is shifting from long-term charter agreements to engineering, procurement, and construction (EPC) and build-own-operate contracts to better attract FPSO contractors.  

Guyana faces slight potential delays. Nevertheless, the Longtail project advances toward 1.7 million b/d combined capacity by 2030 under ExxonMobil's strong partnership framework, Wood Mackenzie said. 

Mexico's Zama project is gaining momentum as Harbour Energy replaces Pemex as operator. Partners are targeting FID this year after years of stalled negotiations.  

Political volatility, US engagement

Political shifts continue to drive regulatory volatility across Latin America. This occurs amid heightened US government engagement in regional affairs, adding complexity to the operating environment, Wood Mackenzie noted.

Following the US military action in early January, Venezuela needs fundamental reforms beyond sanctions relief to attract billions of investment after Maduro’s exit. In the near-term, Wood Mackenzie believes adding over 300,000 b/d is possible within 2 years. Argentina, meanwhile, benefits from US backing, with President Milei's party gaining strength through mid-term electoral victories and securing US$40 billion in Treasury swaps.  

Brazil-US relations show signs of improvement, though high tariffs remain for some sectors. A provisional agreement appears probable following November discussions between Secretary Rubio and Brazilian Foreign Minister Vieira. US tariffs and the US involvement in the region are likely to be a key topic in Brazil's 2026 electoral landscape. Beyond the elections, Brazil maintains robust environmental targets: net-zero emissions by 2050 and 59-67% emissions reduction by 2030, Wood Mackenzie noted. 

Colombia approaches 2026 elections with exploration licensing uncertainty. President Petro's longstanding opposition to exploration creates market doubt. The potential removal of unconventional production restrictions will likely feature prominently in presidential campaign debates. 

Mexico has introduced new arrangements for Pemex joint ventures that require testing to assess fiscal attractiveness against previous contractual frameworks. Bolivia, meanwhlie, faces economic stability concerns following recent elections, Wood Mackenzie said, and Ecuador is expected to continue to struggle to attract private investment to its upstream sector.