Colombia
News

Colombian oil chamber hopeful of 'orderly' energy shift

Bnamericas Published: Monday, July 18, 2022
Colombian oil chamber hopeful of 'orderly' energy shift

A plan to end new oil and gas exploration activity in Colombia could lead to macroeconomic shocks and jeopardize the country's energy security, according to national industry chamber Campetrol

President-elect Gustavo Petro, who will become Colombia's first left-wing leader when he is sworn in on August 7, has vowed to stop issuing licenses for fossil fuel exploration as part of an economic overhaul that prioritizes investments in agriculture, manufacturing and renewable energy.

But Campetrol, which represents more than 140 companies in Colombia's oil goods and services segment, called for an "orderly diversification" process that did not exclude hydrocarbons. 

"Hydrocarbons directly affect 37 of the 61 branches of GDP activity," Campetrol president Nelson Castañeda told BNamericas. “Having sustained national production of crude oil and gas mitigates the cost of public services and therefore the cost of living.”

He added, “the possible loss in foreign currency due to the reduction in exports of crude oil and its derivatives should not be ignored. In 2021, they represented close to US$13.5bn. This shock could mean higher energy prices, an increase in inflation, foreign debt and the exchange rate, as well as a loss of the country's investment rating.”

Crude oil currently accounts for around 42% of Colombia's total exports while coal – which Petro has also promised to phase out – makes up 14%. 

A report published last month by financial services firm Corficolombiana warned that a decision to halt oil and gas exploration would prompt the peso to lose up to 44% of its value against the US dollar by 2027. Such a scenario would see the exchange rate plummet to 7,000 pesos to one dollar from around 3,900 today.

Meanwhile, the trade deficit would increase by 15-39% amid higher demand for imports, Corficolombiana added. 

In another report, national oil petroleum association ACP predicted that Colombia would lose its energy independence within five years under Petro's exploration ban. 

According to Castañeda, the industry has maintained hope that oil and gas exploration will be allowed to continue, despite Petro's campaign promises.

"We trust that the country's institutions will protect the rights acquired by the companies in our sector and will promote its comprehensive development," he said. "Likewise, we are convinced that the incoming government will make the best decisions in order to achieve sustainable regional development, guarantee energy security and improve economic growth, for which our sector is a cornerstone."

The full interview with Castañeda will be published in the coming days.

Subscribe to the most trusted business intelligence platform in Latin America. Let us show you our solutions for Suppliers, Contractors, Operators, Government, Legal, Financial and Insurance.

Subscribe to Latin America’s most trusted business intelligence platform.

Other projects in: Oil & Gas (Colombia)

Get critical information about thousands of Oil & Gas projects in Latin America: what stages they're in, capex, related companies, contacts and more.

  • Project: Block LLA 99
  • Current stage: Blurred
  • Updated: 6 months ago
  • Project: Block PUT 20
  • Current stage: Blurred
  • Updated: 6 months ago
  • Project: Block CAG 7
  • Current stage: Blurred
  • Updated: 6 months ago
  • Project: Block CAG 8
  • Current stage: Blurred
  • Updated: 6 months ago
  • Project: Block COL 5
  • Current stage: Blurred
  • Updated: 7 months ago
  • Project: Block Quifa
  • Current stage: Blurred
  • Updated: 7 months ago

Other companies in: Oil & Gas (Colombia)

Get critical information about thousands of Oil & Gas companies in Latin America: their projects, contacts, shareholders, related news and more.

  • Company: Alpopular S.A.  (Alpopular)
  • The description contained in this profile was taken directly from an official source and has not been edited or modified by BNamericas researchers, but may have been automatical...
  • Company: LBH Colombia S.A.S.  (LBH Colombia)
  • The description included in this profile was taken directly from an official source and has not been modified or edited by the BNamericas’ researchers. However, it may have been...
  • Company: Efigas S.A. E.S.P.  (Efigas)
  • The description contained in this profile was taken directly from an official source and has not been edited or modified by BNamericas researchers, but may have been automatical...
  • Company: Bio D S.A.  (Bio D)
  • The description contained in this profile was taken directly from an official source and has not been edited or modified by BNamericas researchers, but may have been automatical...
  • Company: CoinoGas S.A. E.S.P.  (CoinoGas)
  • The description contained in this profile was taken directly from an official source and has not been edited or modified by BNamericas researchers, but may have been automatical...
  • Company: Termovalle S.C.A. E.S.P.  (Termovalle)
  • The description contained in this profile was taken directly from an official source and has not been edited or modified by BNamericas researchers, but may have been automatical...