Latin American countries represent a fertile ground for oil and gas exploration though various local politics may impact access, according to Luis Giusti, a senior advisor for the Center for Strategic and International Studies.

Central and South American countries are mostly willing and able to accommodate foreign investors, with just a few vocal nations painting an unfair representation of the region, he said at a recent Houston World Affairs Council program. The former chief executive of Petroleos de Venezuela, Giusti was responsible for major reform in the Venezuelan oil sector, including $30 billion in foreign investments between 1995 and 2004.

"There's an inclination to throw everyone in the same sack," said Giusti, who left PDVSA upon Hugo Chavez's election as president of Venezuela.

Despite this, most countries south of the U.S. are important trading partners and offer little to moderate government interference in the petroleum industry. Mexico is a stable supplier of oil to the U.S., but it has burned through a considerable amount of its proved reserves. The country produced 15 billion barrels of oil in 15 years, and is now down to 12 billion proved barrels.

Colombia offers a royalty system in which new operators can get 70% of the profit, and Giusti said it may become a major player in the near future. However, it is not a major oil supplier, producing only 150,000 barrels a day.

Venezuela is one of the problem countries in the region, with production having been decreased significantly since Chavez assumed power in 1999. At that time, output was 3.5 million barrels a day. Currently, the figure is 2.6 million, however.

Venezuela is sinking money into plans that have little chance for success, such as building a $30-billion pipeline to transport gas from Venezuela to Buenos Aries, he added. "(Venezuela) will spend $30 billion, which it won't have, to move 5 billion cubic feet, that doesn't exist, to Argentine customers, which don't exist." (For more on Venezuela, see "E&P Momentum" in this issue.)

Despite the problems, foreign investors, including U.S. oil companies, have sunk a lot of capital into Venezuelan assets, and must now navigate the new political and tax terrain. This may become increasingly difficult, since Chavez views himself not only as the leader of his nation, but an intercontinental leader of the left, namely socialist, agenda, Giusti said.

Giusti does not believe Chavez is as beloved among other South American nations as the Venezuelan president believes he is. "People are trying to keep away from him. They'll only sing his praises when he brings the goodies."

Bolivia likewise has suffered decreases in production following the nationalization of gas production under President Evo Morales. "I think this is a tragedy for the Bolivians. They're No. 1 in gas reserves, but they're doing nothing significant and will continue to do nothing significant."

Brazil has strong production and is seeking outside investment, but due to the nation's desire to have energy self-sufficiency, it will offer very little in terms of oil exportation. Ecuador continues to be too unstable to be a reliable investment, he said.

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