Colombia reassures oil producers after Davos vow

Market: Crude oil
23/01/23

Colombia's energy minister downplayed the chances of cancelling existing oil exploration and production contracts after reaffirming the country's commitment to not award new ones at the World Economic Forum in Davos, Switzerland.

"We have not talked about ending contracts for the exploration and production of oil and gas," energy minister Irene Velez said on social media yesterday. "But Colombia is heading towards the transition to produce cleaner energy."

Velez on 20 January in Davos had insisted that the country will no longer award any new E&P contracts for natural gas or oil as part of a shift in policy after President Gustavo Petro took office in August.

"This is of course very controversial at the national level," she said. "But for us it is a clear signal of our commitment to fight climate change."

The administration is banking on tourism and development cleaner energy to fill the gap in revenues that this would cause.

Petro and Velez have reiterated often that Colombia will not grant new oil, natural gas or coal contracts as part of their plan to transition to renewable energy. But finance minister Jose Antonio Ocampo said two months ago that the government could reconsider its position. The ministries of finance, mines and energy, state-controlled oil company Ecopetrol and the ANH are weighing the issue.

Yesterday, public credit director Jose Roberto Acosta denied that Colombia will stop signing new oil and gas contracts.

The government has made several contradictory statements on the issue. In August Velez stressed the importance of ensuring energy security at a meeting with natural gas industry leaders, appearing to pull back from earlier comments signaling the country may turn to gas imports from neighboring Venezuela if it were unable to meet domestic demand.

Colombia emits an average 237mn t/yr of total GHG emissions, or just 0.46pc of the global total, partly thanks to extensive hydroelectric generation.

Colombia will need to add 250mn bl/yr of oil reserves to stave off a rapid decline in oil production, former hydrocarbon's director Julio Cesar Vera said. The country produces about 757,00 b/d.

By Diana Delgado

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