Global upstream update: diverging development strategies in Latin America, investment at risk in Africa, and Kazakhstan supply tensions explained

Our Global Upstream Update presents timely analysis of key industry topics from our regional experts situated around the world. Here we will run through a few of those. 

We compare and contrast the approaches of ExxonMobil and Petrobras in exploiting the huge Stabroek and Búzios fields in Latin America at the lowest possible unit costs. The team takes a look at high impact projects at risk from price uncertainty in Africa. We also consider Kazakhstan’s oversupply against its OPEC+ quota. 

Please fill out the form to access a free extract from the report, which includes a range of charts and data. Or read on for a quick taste of key themes in these regions. 

Differentiated Latin America development strategies: the nuances in ExxonMobil and Petrobras’ delivery of the huge Stabroek and Búzios fields 

ExxonMobil’s 6.6 million-acre Stabroek Block off the coast of Guyana and Petrobras’ Búzios deepwater field in the Santos Basin are both fast approaching one million b/d. But the two operators’ development strategies for these huge projects are materially different. 

One key element is the procurement of floating production storage and offloading (FPSO) vessels. While Petrobras has commissioned bespoke facilities from multiple suppliers for Búzios, ExxonMobil’s adoption of 70-80% standard topsides and its commitment to SBM as preferred FPSO supplier allows it to start construction much earlier. This results in lead times that are up to a year shorter from final investment decision (FID) to first oil for ExxonMobil. 

On the other hand, Búzios benefits from new technology that reduces drilling times and cuts the number of wells required, which has stabilised unit capex. In contrast, ExxonMobil’s Stabroek costs have increased over time, due to rising reservoir complexity and inflation (see charts below). 

Búzios’ low breakevens provide long-term resilience where Stabroek’s faster development is driving higher internal rates of return (IRR).  

Market turmoil puts African projects at risk 

Price pressure will squeeze Africa cashflows, likely creating an activity slowdown. Capital-intensive greenfield projects and high-cost late-life assets are particularly at risk. We estimate that around 8% of current regional production doesn’t cover investment costs at US$65 per barrel.   

More importantly, lower prices have significant implications for future upstream development in the region. Around 25 projects accounting for over US$100 billion in investment could be ready for sanction by 2029. However, many of these assets will be marginal at lower oil prices.  

Our analysis indicates that only 40% of planned resources achieve a 15% return at a price of US$50/bbl. If corporate planning prices start to fall (few have been adjusted yet), capex-intensive gas and LNG projects will be particularly at risk. 

Kazakhstan faces limited options to trim overproduction  

Kazakhstan produced more than its OPEC+ quota in 2024, despite downtime at key megaprojects in the country. But with the expansion of the Tengiz field completed in late January 2025, the country’s overall output has been boosted well above its agreed quota. 

Together, the Tengiz and Kashagan megaprojects account for more than 65% of Kazakhstan’s crude output. If the country was to reduce output to comply with its quotas, these would be the obvious place to start. But international partners in the Tengiz project have invested US$50 billion in its expansion and are keen to maximise value before contract expiration in 2033.  

Cuts of the required magnitude at fields operated by state-owned KazMunayGas (KMG) would hurt  local employment and reduce output at KMG’s mature fields to the point where future restoration would be very challenging. 

Kazakhstan’s choices are to ask OPEC+ for a new reference level, or  consider exiting the OPEC+ group. The new Kazakh energy minister recently stated that the national interest, not OPEC+, will determine the country’s oil production level although the country subsequently indicated its continued commitment to OPEC+. 

Current OPEC+ strategy indicates the 2.2 million b/d voluntary curtailments will continue to be unwound this year, potentially setting the scene for capacity and quota conversions thereafter. Like a select few other producers, Kazakhstan’s cards are already clearly on the table. 

Don’t forget to fill in the form at the top of the page to receive your complimentary extract from the report. This covers these hot topics in more detail with a range of charts and data, and also takes a look at the deal for Russia to supply Iran with 55 billion cubic metres of gas per year via Azerbaijan.