- U.S. offshore oil projects face stiff competition from Latin America, with Guyana and Brazil offering lower break-even costs.
- Rising Gulf of Mexico production costs and tariffs are driving operators to explore opportunities abroad.
- ExxonMobil’s Hammerhead project and Brazil’s new offshore blocks highlight growing activity in Latin America.
- LNG and renewables are increasingly shaping the Gulf of Mexico’s energy landscape, signaling a shift in investment focus.
The Gulf of Mexico is undergoing a shift as the focus moves away from oil-driven deepwater projects toward LNG and renewables, while offshore Guyana and Brazil are emerging as leading regions for production growth. New LNG facilities, such as Venture Global’s Plaquemines project, are advancing quickly, and analysts anticipate U.S. export capacity to nearly double by 2029. This evolving landscape was highlighted in a report from S&P Global.
Offshore Crude Production Faces Global Competition
U.S. offshore oil projects are increasingly competing with new production in Latin America, as rising costs and regulatory challenges have shifted investment interest abroad. According to Underwriter Steven Weiss, the scale of large, expensive deepwater projects in the Gulf of Mexico has declined, while opportunities in offshore Guyana and Brazil have grown more attractive. High break-even costs in the Gulf, averaging $57.70 per barrel, contrast with more competitive rates in Brazil ($55.29 per barrel) and especially Guyana ($34.09 per barrel), making Latin American waters increasingly appealing for developers.
U.S. tariffs on imports from Canada and Mexico have further elevated costs, influencing operators to consider projects elsewhere. Recent developments underscore this trend: ExxonMobil approved the Hammerhead project offshore Guyana, its seventh in the prolific Stabroek block, while Brazil’s National Petroleum Agency expanded its Open Acreage program by 275 new offshore exploration and production blocks across the Campos and Santos basins. With U.S. upstream spending remaining cautious, offshore oil operators are likely to continue looking toward Guyana and Brazil for growth opportunities.
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Source: S&P Global
