Although most Latin American governments are undoubtedly eager to attract the hundreds of millions that majors can invest, juniors provide important advantages to smaller countries with either emerging or declining oil and gas industries. While majors seek out major returns for their investments, juniors are happy to explore basins that are either past their prime or high-risk. And although the majors have a monopoly on deepwater projects due to their high complexity and cost, advances in the industry have made onshore technologies available to companies both large and small. That means the juniors can contribute to production, albeit in a small way, and better yet can do the early exploration work on high-risk fields. That, governments hope, could lead to the discovery of productive fields or basins that could attract the interest of majors.

Juniors have other advantages that allow them to thrive in Latin America. The juniors tend to be highly efficient with money they raise on the T.S.X. Venture Exchange in Toronto and the Alternative Investment Market (A.I.M.) in London, investing every dime they can in exploration in lieu of overhead expenses. The companies are also experts in their countries, as management often lives in the country of operations and hires local experts. Those factors give the juniors a unique working knowledge of the local geography and the political and social scenes that help them avoid local conflict and effectively work with governments to secure permits and licenses. And the governments in Colombia and Argentina are eager to have the juniors.

Colombia’s policy to offer attractive contract terms and award numerous blocks reflects the central government’s push to maintain oil self-sufficiency, which at current rates will last through 2015. Although state oil company Ecopetrol’s 400,000 barrels per day dominates Colombia’s total production of more than 550,000 bbl/d, dozens of small companies have appeared on the scene, as the government has signed more than 180 upstream contracts in recent years. Juniors have made strides in developing heavy crude fields in the Llanos basin, which covers some 77,000 square miles.

But the success that the juniors are having in Colombia and Argentina is also making new territories for exploration harder to find. And although the two countries are opening offshore areas for exploration, the juniors are unlikely to compete, due to the high price of exploration.

Smaller net importers such as Chile, Paraguay, and Suriname, as well as a number of Central American and Caribbean countries, are eager to exploit this discontent and attract juniors to their basins. Chile, for example, held a bidding round last year for 10 blocks in its Magallanes basin down south, as the country is desperate to find new natural gas sources. Nicaragua resolved a border dispute last year with neighboring Honduras and as a result is opening new territories for exploration. Suriname’s state oil company Staatsolie, which produces just 15,000 bbl/d, aims to launch a new bidding round in July 2008 for near-shore blocks.

These smaller countries are attracting a lot of attention, but the risks are high as the blocks are underexplored. Equipment can be hard to come by and in some cases difficult to mobilize, due to inhospitable jungle terrain. Juniors won’t know for years whether there’s highly commercial gas and oil potential in countries like Chile, Paraguay, and Nicaragua. But for now there are more than enough companies willing to invest, and if discoveries are made many more will join in the hunt.