Energy News Blog

Russia’s Interests in Latin America

– Irina Mironova

South and Latin America is a region rich with oil and gas resources, with its 19% of world’s proved oil reserves (figure 1). This region is yet to play a role in international oil and gas trade: if in case of natural gas, the share of Central and South America in world’s production measures up with its share of reserves (figure 2), for oil there is room for increase in the role performed by this region in international markets.


Source: BP Statistical Review of World Energy 2015 

Figure 1. Oil reserves and production


Source: BP Statistical Review of World Energy 2015
Figure 2. Gas proved reserves and production

According to the IEA’s Medium Term Oil Market report, exports from Latin America to Asia – the fastest growing consumer region – will increase by 0,4 MMbbl/d in the period up to 2020 (the routes are shown in Figure 3). Russia has a role to play in the development.


Source: International Energy Agency quoted in CIEP 2015 (p. 6)
Figure 3. Changing Global Crude Oil Flows

On September 28, the Kommersant newspaper – one of the leading business newspapers in Russia – included a themed supplement to its daily issue fully devoted to activities of the Russian companies in Latin America’s oil equipment sector. The Russian “Uralmash Oil and Gas Equipment Holding Company” (Уралмаш НГО Холдинг) is planning to create a joint venture with Argentinian colleagues, specialising on oil drilling equipment. According to Kommersant, this project could become the catalyst of cooperation between Russia and Argentina – notably, such cooperation would not be limited to the oil sector. The deal was initially announced in 2014, after the visit of Argentina’s Minister of Industry (Debora Giorgi) to the company’s office in Moscow. The announcement was preceded by a serious work of the company in the region ensuring its entrance to the equipment market.

This initiative is not unique: a few years back another company based in Ekaterinburg, the Generation group (Промышленная группа Генерация) was actively trying to enter the Brazilian and Argentinian market and sell its oil and gas equipment.

Engaging in equipment sales (as in the case of Generation) and jointly producing such equipment (as in the case of Uralmash Oil and Gas Equipment) provides Russia with opportunity to benefit from oil and gas E&P in Latin America.

Is Latin America’s potential of enhanced role in the oil markets the sole explanation of Russia’s efforts to gain presence in the region? The short answer is no.

There are several factors explaining these efforts and the interest of the Russian companies. Firstly, there is a processes of building an alternative / complementary system of international governance that are taking place already for some years. The aim of such system is to include players which are a significant part of the world economy into the governance system. The creation of G20 and the institutionalisation of the BRICS format are part of the process. Both issues have been on Russia’s foreign policy agenda for some time, and in fact, Russia was one of the most proactive participants of the BRICS format in developing it from abbreviation to actual multilateral format.

Secondly, Russian companies are in search of solutions amidst the economic downturn and the sanctions regime. There are several layers of difficulties for the energy sector: finding alternative sources of financing, acquiring technology, and entering the new markets. The BRICS context is actually a very interesting set-up in this respect, since some of its participants (like China and India) serve as markets as well as source of financing; China, India and South Africa are all major players of the international markets; and Brazil has extensive expertise in deepwater exploration and production. The growing upstream sector, the development of unconventional sources, and the role of the leading countries of the region in emerging system of global governance all make Latin America an interesting partner for Russia, not only in terms of oil and gas equipment, but in a much wider list of aspects. Moreover, if Russia’s Pivot to Asia does materialise as expected, there may well follow a Pivot to Latin America.


Review: South America. Themed Supplement. Kommersant, September 28, 2015.

Crude Oil Markets in 2015: The Battle for Market Share. The Hague: Clingendael International Energy Programme, 2015.

Medium Term Oil Market Report 2015. Paris: IEA/OECD, 2015.

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