Colombia’s old troubles hurt Petro’s new energy drive
A new tax on oil and coal producers may further undermine investment and energy security, writes Carla Bass
Entrenched subsidies, violence and social conflict that have long plagued Colombia's traditional hydrocarbon producers are now hurting Colombian president Gustavo Petro's ambitious plan to move abruptly to cleaner energies and break dependencies on crude and natural gas.
Some Colombian families had to resume burning wood for cooking fuel in early September — an energy transition in the opposite direction — after truckers blocked roads in protest against the end of diesel subsidies, slowing deliveries of alternative household fuel LPG. And around the same time, a series of new attacks on Colombia's oil pipelines following the breakdown of peace talks between the government and leftist guerrilla group ELN hobbled crude flows. Indigenous communities in late August temporarily took over a gas processing plant important to LPG output to demand more social spending in their territories. And the country recently experienced a new shortfall of refined products, when a refinery shutdown cut into its barely balanced jet fuel supply.
Energy shortages were not part of Petro's transition plan, but these and similar incidents have not swayed him from an energy policy based on not awarding new oil and gas exploration contracts, even with slightly less than two years left in his term. Ratcheting down on hydrocarbon use before cleaner sources of power are in place could put Colombia at risk of an even wider gap in its energy supply.
Bogota forecasts relatively flat crude production for 2025, at 763,000 b/d — just 2pc higher than this year but 2pc lower than in 2023. Output will begin to decline in 2027 without new exploration contracts, Colombian petroleum association ACP says, which is sooner than the finance ministry's projection that it will start falling in 2030. This would reduce the roughly 400,000 b/d of crude available for export as well as the approximately 360,000 b/d used to feed its refineries, according to data from the government and state-controlled Ecopetrol. Oil and oil products represented 32pc of the country's export value in 2023, ACP calculates.
Frac cocaine
This outlook is not deterring the Petro administration from its path. The president — who has referred to hydrocarbons as a poison like cocaine — recently opposed a deal with US firm Occidental Petroleum that would have added 65,000 b/d to Ecopetrol's production in the Permian basin in Texas, because of his opposition to hydraulic fracturing. The administration is also pushing for congress to approve a complete ban on the drilling method in Colombia owing to environmental concerns.
The government has proposed adding a new tax on oil as well as coal producers — another key Colombian export — that many in the industry have said will further reduce investment incentives even under existing contracts. Without more investment — and a return to new exploration contracts — Colombia is putting its energy security at risk needlessly, producers warn.
The administration of the country's previous president, Ivan Duque, had outlined an energy transition strategy that was more akin to Brazil's push under President Luiz Inacio Lula da Silva — to increase hydrocarbon production temporarily, to help pay for the costs of later moving to cleaner energies. But Ecopetrol — long seen as a regional leader in terms of its transition strategy — had to reduce green spending planned for this year because of budget constraints.
Petro's strategy would see Colombia fall in its ranking as a leading regional oil producer. Guyana's output is likely to surpass Colombia's in 2025, and possibly more than double it in 2026. Petro is up for re-election in 2026, but his popularity has declined while in office because of changes to health care, energy shortages and corruption allegations. Colombia's crude production looks set for a similar decline.
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Hurricane Helene shuts in 29pc of US Gulf oil
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US trucking index at 18-month high in August: ATA
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Vertex Energy files for bankruptcy, seeks sale
Vertex Energy files for bankruptcy, seeks sale
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Helene shuts in about 16pc of US Gulf oil: Update 2
Helene shuts in about 16pc of US Gulf oil: Update 2
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