Following the regulatory reforms introduced in 2003 that freed state-owned oil company Ecopetrol from its role as administrator of hydrocarbon resources and opened the industry up to more private sector participation, Colombia began a period of strong oil production growth. Between 2005 and 2013, crude production doubled and proved reserves increased by close to 60%.

However, the growth rate has been slowing down since 2014. Since then, the fall in oil prices has exposed the deficiencies of the sector, such as the high tax burden, the complex relations with communities in producing areas and the rigidity of environmental regulations. These factors not only put the brakes on the upward trend in production, but also led to a drastic fall in investment in exploration. Although in the short term improved crude prices are expected to stabilize output, analysts caution that the shortcomings in the sector will be a hindrance to expansion in the coming years.

In this report we outline the current state of the hydrocarbons industry in Colombia and the expectations for 2017. In addition, we identify the country's offshore potential and analyze the progress and setbacks of transportation and refining infrastructure in recent years. Finally, we see how imported liquefied natural gas (LNG) is helping to meet increased demand.

Figure: Production


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