Energy market of Latin America countries in situation of pandemic: threats, protection mechanisms and potential impact

Abstract

The COVID-19 pandemic has affected all countries of the world, and its consequences are tangible not only today, but will have effect in the long run. The article is devoted to the impact of the coronavirus crisis on the energy market in Latin America. The study identifies the main threats, outlines potential protection mechanisms, and attempts to predict the further development of the situation in the energy sector in times of crisis.
Mexico has begun to actively implement a number of protection mechanisms (hedging, redirection of state trust funds, etc.) to counter the effects of the coronavirus crisis. Argentina`s police is similar, as the country has introduced a decree obliging oil companies to support production and investment at the level of 2019 in order to mitigate the impact of the crisis. Venezuela, as a country the most dependent on oil exports, is facing an acute shortage threat. They allowed to sell oil to private companies, which in turn put an end to the state’s monopoly on the energy market. The oil price collapse has highlighted serious problems in the Colombian economy, which could last for several years.
Continuation or reintroduction of quarantine measures does not give hope for a rapid recovery in demand for oil and petroleum products, which threatens to reduce investment in the region. Therefore, governments are forced to seek financial support from international organizations or other states. It is noted that the pandemic has dealt a severe blow to countries that have lost potential opportunities and failed to reach a better economic level. In addition, difficulties have been encountered in implementation of large-scale projects in the field of oil production.
The authors conclude that most countries of the region will have to adapt to new realities and, as a result, make structural changes in national economies. As the COVID-19 pandemic is unlikely to end in the near future and compliance with quarantine measures remains relevant, it will be necessary to look for other ways of economic development that are not related to energy exports.