(Idea) Latin American E&Ps Are Very Attractive
By: Jon Costello
Latin America hasn’t been near and dear to the hearts of most energy investors in recent years. The region’s volatile political backdrop has heightened the risk of permanent loss for investors while introducing significant volatility into its E&P stocks.
In Argentina, years of capital controls, currency instability, and interventionist economic policy kept foreign investment out of the Vaca Muerta shale play despite its world-class resource potential.
In Colombia, President Gustavo Petro’s administration actively discouraged hydrocarbon development, banning fracking and suspending new exploration rounds.
And in Venezuela, two decades of mismanagement under Hugo Chavez and Nicolas Maduro collapsed what was once the largest oil producer in the hemisphere.
What makes the current moment interesting is that all three countries are moving in a more constructive direction simultaneously. A combination of favorable political shifts, world-class geology, and compelling valuations makes this corner of the energy market worth a closer look.
Production Regions and Their Prospects
The headline Latin American oil production growth story is Argentina’s Vaca Muerta shale formation. In late 2025, Argentina hit record crude oil production of over 860,000 bbl/d, driven primarily by the Vaca Muerta, where output surged roughly 26% year-over-year. Argentina exported an average of 180,000 barrels per day in the first half of the year and posted its largest energy trade surplus in over three decades. The Vaca Muerta Oil Sur pipeline, led by YPF, is expected to begin operations in 2026 and reach full capacity of 380,000 barrels per day by mid-2027. Argentina’s Chamber of Hydrocarbons Exploration and Production expects the country’s total output to approach 1.5 million barrels per day by 2030.
Colombia remains the other major basin for independent E&P operators. The Llanos and Putumayo basins host the majority of non-state production, though the regulatory environment has been challenging under President Petro’s administration. Production from independents has been steady but stagnant, and the near-term outlook hinges on the May 2026 election.
Colombia’s upstream potential extends beyond what current production levels and trends suggest. The country’s proven reserves stand at 2 billion barrels. They have been declining largely because the Petro administration froze new exploration licensing, shutting down the pipeline of future discoveries. However, the geology is not the problem. The Llanos basin remains underexplored in its deeper formations, while the Middle Magdalena Valley holds meaningful shale potential that has been locked up by the fracking ban. Furthermore, Colombia’s offshore Caribbean blocks have attracted early-stage interest from majors but have never been properly developed. A post-Petro administration that reopens exploration rounds and lifts the fracking moratorium would not just stabilize production, it would reopen a country that was, until recently, one of the most attractive independent E&P markets in the hemisphere.
An Opening in Venezuela
Venezuela is the wild card. Following Nicolas Maduro’s removal in January 2026, the country’s oil sector is in the earliest stages of what could be a multi-decade recovery. Production currently sits around 900,000 to one million barrels per day, a fraction of the 3.5 million barrels per day Venezuela produced in the late 1990s. The Trump administration has begun to selectively roll back sanctions to enable oilfield equipment imports and authorized commodity traders to resume Venezuelan crude exports. Analysts estimate production could reach 1.2 million barrels per day by the end of 2026 if the sanctions rollback continues, but restoring output beyond that level would require sustained investment of approximately $8.5 billion per year over the next decade. The opportunity is enormous, but so is the execution risk. That said, the direction of travel is clear: for the first time since the early 2000s, Venezuela is moving toward a framework that could accommodate meaningful foreign participation in its upstream sector.
The bull case for Venezuela centers on acting President Delcy Rodriguez. Rodriguez served as Maduro’s executive vice president and was one of the most powerful loyalists in his inner circle. This makes her pivot toward market-friendly oil reform all the more striking, because it signals a pragmatism on the part of the regime’s establishment that was absent under Maduro.
For weeks after Maduro’s removal, Rodrigues pushed back on Washington’s demands. More recently, however, she has moved to align with the Trump administration on Venezuela’s energy policy. In late January 2026, Rodriguez signed into law a sweeping oil industry overhaul that ends PDVSA’s monopoly over production and sales. The law also allows private companies to assume full operational control of projects, caps royalties at 30%, and provides the executive with flexibility to adjust rates based on capital needs. It also permits independent international arbitration of disputes, thereby removing the previous requirement that all disagreements be settled in Venezuelan courts.
U.S. Energy Secretary Chris Wright toured Chevron-PDVSA joint venture facilities in the Orinoco Belt in February, and Interior Secretary Doug Burgum visited Caracas in early March to discuss expanding oil and mineral production. Trump has publicly called the relationship “extraordinary.” If Rodriguez continues on this trajectory, Venezuela could become the most significant new upstream opportunity in the Western Hemisphere, a country that claims 300 billion barrels of proven reserves and produces under a million barrels per day, with a legal framework now designed to attract the foreign capital and expertise it needs to resuscitate production growth. For LatAm-focused E&Ps with operational expertise in heavy oil and complex political environments, the window is opening.
The bear case for Venezuela is that Rodriguez remains deeply unpopular among the Venezuelan public. Polling from January 2026 shows Rodriguez with a favorable image of only about 13%, and 94% of Venezuelans say they don’t believe anyone from the Maduro regime should lead the post-Maduro transition. The opposition leader, María Corina Machado, polls at roughly 50% vote intention in a hypothetical election and dominates the field.
This is the hazard that confronts investors who enter Venezuela. Rodriguez is doing what foreign investors want—signing oil reform laws, welcoming U.S. officials, opening PDVSA to private operators—but she has little domestic legitimacy. Ultimately, she’s an insider from the Chavez era governing without a popular mandate, and Washington has shown no urgency to push for elections. The Venezuelan opposition has called for a democratic transition and elections as a precondition for long-term investment stability. Perhaps Rodriguez can win public support by reviving the domestic economy and introducing reforms that weaken the corrupt Chavez-Maduro regime’s grip over the society and its institutions. If so, she stands a chance at the polls come election time. If not, she can refuse to step down or yield to a more popular candidate, which at the moment would be Machado. I don’t have any insight into which way it will go. I mention it because any investor pursuing ownership stakes in Venezuelan assets should proceed with a clear-eyed view of political risk, which will remain heightened until a stable and functioning democracy is established.
Political Tailwinds
Despite the regional risks, the political backdrop across Latin America has turned more constructive than it has been in years.
In Argentina, President Milei’s pro-market reforms have been transformative for the energy sector. Deregulation, macroeconomic stabilization, and the active courtship of foreign capital have directly translated into rising production and surging exports.
In Colombia, President Petro, who banned fracking, halted new exploration rounds, and openly discouraged hydrocarbon investment, is constitutionally barred from re-election. The presidential election is scheduled for May 31, 2026, and the leading candidates from the center and right have signaled a return to more conventional energy policies. A new administration that resumes exploration licensing would be a meaningful catalyst for Colombian-focused E&Ps.
In Venezuela, the post-Maduro transition has opened a window that had been closed for years. The U.S. has signaled its intent to rebuild Venezuela’s oil infrastructure and has authorized the import of oilfield equipment and services. Chevron has maintained operations throughout the sanctions era and is positioned to expand. For smaller operators with Latin American expertise, the question is not whether Venezuela represents an opportunity — it clearly does — but when the regulatory and contractual framework will be stable enough to commit capital. That process is underway but far from complete. JPMorgan estimates Venezuelan production could reach 1.4 million barrels per day within two years and potentially 2.5 million barrels per day over the next decade, but that assumes sustained capital commitment and political stability that cannot yet be taken for granted. The companies best positioned to participate are those already operating in the region with established relationships, local expertise, and the operational flexibility to move quickly when the framework solidifies.