Europe is shifting its attention to energy resources in Latin America

The impact of the recent war in the Middle East on the global economy is far-reaching. This is perhaps most clearly seen in the energy market, where the price of crude oil has risen from $ 60 in February 2026 to over $ 100 per barrel in April. In the European market, natural gas prices rose by around 40 % between February and May 2026, increasing from € 32/MWh to over € 45/MWh. 

This means Europe is already facing its second energy crisis in just a few years. The first was triggered by Russia’s invasion of Ukraine, which forced the rapid replacement of Russian oil and gas imports. EU Commission President Ursula von der Leyen subsequently declared “derisking” a guiding principle of European energy security in 2023, and diversification became a central component of procurement strategies. This was also the case in Germany.

Germany’s alternative gas source is drying up

Following the cut-off of Russian gas supplies, Germany relied primarily on two measures: increasing pipeline gas imports from Norway and rapidly expanding LNG import capacity. Norway now accounts for nearly half of Germany’s gas imports. However, Norway will soon reach its capacity limit, and no new gas fields are being tapped.

At the same time, starting in 2022, Germany has built several LNG import terminals that can be converted to handle hydrogen in the future. LNG is transported by ship and is not tied to fixed pipeline connections, which opens up new possibilities. However, new LNG supply chains to Germany remain vulnerable. 

For example, since 2022 Germany has been negotiating a supply contract with Qatar for 2 million tonnes of LNG per year. However, Qatar’s exports depend on ships being able to pass through the Strait of Hormuz. Compounding the issue is the fact that Iranian attacks in March 2026 caused massive damage to the large Ras Laffan LNG plant. This has once again disrupted the Qatari supply route. Today, more than 90 % of Germany’s LNG imports come from the United States.

South America becomes more attractive to Europe

German industry and commerce are therefore likelier to turn their attention towards Latin America: the region is generally considered stable, and the Atlantic offers Europe safe shipping routes. In addition, European companies such as Shell, TotalEnergies and Repsol are already active in Brazil, Guyana, Mexico and Argentina.

That said, the energy policies of Latin American countries vary. Mexico, under climate scientist Claudia Sheinbaum, and Colombia – should a left-leaning government take office following the runoff election in late June – are likely to reduce their oil and gas exports and keep more energy within their domestic markets. Other countries, on the other hand, are preparing to export fossil fuels.

Brazil and Guyana are particularly important for the oil market. Both countries have significantly expanded their offshore production. Guyana’s share of German crude oil imports rose from nearly zero in 2021 to six percent in 2025, surpassing Nigeria’s share.

The LNG market is also growing. Trinidad and Tobago and Peru already export LNG to Europe, but their supply volumes are limited. The greatest potential lies in Argentina. The Vaca Muerta shale gas field is one of the largest in the world, and plans are in place to develop LNG infrastructure. 

In late 2025, Argentina and Germany signed a preliminary agreement for LNG deliveries of up to 2 million tonnes annually beginning in 2027.

LNG could serve as a bridge to the energy transition – under the right conditions

For many years, Germany has been promoting the expansion of renewable energy and the production of green hydrogen in Latin American countries. One could argue that the focus on LNG contradicts this. The two, however, are not necessarily mutually exclusive: LNG can serve as a bridge technology, and the export revenues can help to finance the energy transition in the region.

The additional revenue from oil and LNG could be channelled into wind farms, electrolysers and hydrogen pipelines, as well as into the production of climate-friendly steel, aluminium and fertiliser using low-emission hydrogen. This is supported by the fact that energy companies such as Petrobras in Brazil and YPF in Argentina are partly state-owned and are already investing in renewable energy, carbon capture and storage (CCS) and hydrogen. 

Naturally, this outcome is by no means a given. Oil exports – and LNG exports in particular – can only contribute to the energy transition if governments and companies actually use the additional revenues for decarbonisation. Germany and Europe could work towards this goal. However, such efforts are only credible and likely to succeed if Europe’s own climate protection targets (e.g. the EU Green Deal, Fit for 55) are consistently pursued.

Andreas Stamm is a project lead and senior researcher for “Transformation of Economic and Social Systems” at the German Institute of Development and Sustainability (IDOS).
andreas.stamm@idos-research.de

Verónica Robert is a professor of economic development at the Universidad Nacional de San Martín in Argentina.
Google Scholar | Verónica Robert