Colombia is a land of contrasts – of tradition and innovation, wealth and poverty, triumphs and tragedy.
The South American nation of 51 million inhabitants borders the Caribbean Sea and the Pacific Ocean, with biodiversity surpassed only by its neighbor Brazil.
Newly elected Colombian President Gustavo Petro highlighted Colombia’s contrasts in an address to the United Nations in September, delivering an eloquent but confrontational discourse highlighting how the country’s environment and people suffer from fumigation and internal conflict resulting from the War on Drugs.
“I come from one of the three most beautiful countries on Earth. There is an explosion of life there. Thousands of multicolored species in the seas, in the skies, on the land ... I come from the land of yellow butterflies and magic. There in the mountains and valleys of all the greens, not only the abundant waters come down, but also torrents of blood. I come from a country of bloody beauty,” he said.
“My country is beautiful because it has the Amazon Jungle, the Chocó Jungle, the waters, the Andes ranges and the oceans. Our jungles produce oxygen for the planet and absorb carbon dioxide. One of those plants that absorbs CO2, among millions of species, it is one of the most persecuted on Earth. Its destruction is sought at any cost. It is an Amazonian plant, it is the coca plant, a sacred plant of the Incas. It’s a paradoxical crossroads; the jungle that we are trying to save is destroyed at the same time.”
The ex-guerilla fighter and former mayor of Bogotá spent his entire career preparing for this moment. Petro is the first left-wing leader to assume the presidency in Colombia.
His political agenda prioritizes social justice and environmental protection and includes accelerating the energy transition, reforming the tax system, negotiating peace agreements with armed groups and reestablishing diplomatic relations with Venezuela.
Other leftist leaders in Latin America – Ignacio Lula da Silva in Brazil, Cristina Fernández de Kirchner in Argentina and Manuel Lopez Obrador – have supported the national oil companies and continued exploration and production, but Petro’s policies advocate an immediate cessation from dependence on petroleum and coal, which he likens to cocaine addiction.
“What is more poisonous for humanity – cocaine, coal or oil? The opinion of power has ordered that cocaine is the poison and must be prosecuted, even if it only causes minimal deaths due to overdose, and more due to the mixtures caused by its clandestine use, but, on the other hand, coal and oil must be protected, so that their use can extinguish all humanity. These are the things of world power, things of injustice, things of irrationality, because world power has become irrational,” he said.
“When actions were most needed, when speeches were no longer useful, when it was essential to deposit money in funds to save humanity, when it was necessary to get away from coal and oil as soon as possible, one war and another and another were invented. Ukraine was invaded, but so were Iraq, Libya and Syria. There were invasions in the name of oil and gas. In the 21st century we discovered the worst addictions: addictions to money and oil.”
Oil and Frac’ing on the Ballot
Colombia’s 2022 presidential campaign was a battle of sharply contrasting viewpoints, which included a traditional debate about the best solutions to address inequality.
Petro and allied candidates who called themselves the “Historic Pact” advocated increasing taxes on large corporations and the wealthy, while other political alliances advocated providing support to employers.
Debates also surfaced around hydraulic fracturing.
In July, Ecopetrol President Felipe Bayón reported that the company’s joint venture in the Permian Basin in the United States brought in more revenue to Ecopetrol than any other source.
The Duque administration promoted hydraulic fracturing projects, while Petro promised to ban them if elected president. Faced with concerns about the contamination of water supplies and use of indigenous lands, three out of four presidential frontrunners came out against frac’ing in Colombia.
While candidate Petro talked about stopping new exploration activity, Colombia’s National Hydrocarbon Agency (ANH) worked to finalize exploration and production contracts awarded in Colombia Round 2021.
The ANH awarded 70 contracts between 2018 and 2021 and currently has 329 hydrocarbon exploration and production contracts and agreements force. Of those 233 in execution, 39 suspended and 57 in the process of completion. Colombian law states that once awarded, contracts must be honored.
ANH President Armando Zamora left office in September, and the government named his successor, Liliana Guatame Aponte, in late November.
From Candidate to Commander-in-Chief
On June 19, Petro won the election with 50 percent of the vote and he moved quickly to name cabinet members, including Irene Vélez, a philosopher with a doctorate in political geography, as Minister of Mines and Energy.
An outsider to the oil and gas sector, Vélez had a steep learning curve. The minister made headlines several times when struggling to answer technical questions from the press, and she received criticism from all sides of the political aisle after stating that Colombia could import gas from neighboring Venezuela.
Since taking office, Vélez has met with leaders representing the oil and gas, mining and business sectors.
“The commitment of this government is to carry out the energy transition process by engaging in constant conversation with the different members of the sector and to find ways to accelerate this transition in a safe, technical, academic, social, participatory and environmental manner,” Vélez announced following a meeting with the Colombian Petroleum Association in August.
That same month, Ecopetrol announced two discoveries in the offshore Colombian Caribbean, the Uchuva-1 exploration well drilled with Petrobras, and ultra-deepwater Gorgon-2 well, drilled with Royal Dutch Shell.
Petro dismissed the Ecopetrol Board of Directors president and replaced him with a political ally, but did not remove Felipe Bayón, the company president who has been a vocal advocate for continued exploration and development of Colombia’s offshore and unconventional resources, but also has led the company through a corporate transformation and its implementation of renewable energy projects, including Latin America’s largest solar park and hydrogen initiatives.
Bayón speaks frequently about Ecopetrol’s contribution to the economy and urges the government to avoid putting an unnecessary burdens on oil and gas companies, who employ thousands of Colombians and whose tax dollars provide funding for the government’s social projects.
Some of the most heated debates stem from provisions of the new tax reform passed in November by Colombia’s Congress, where Petro’s Historic Pact has a strong influence.
The reform includes increased tax rates on oil and coal production when international prices go above certain levels and removes the tax deduction for royalties paid to local governments. The new law states that oil companies will be taxed an additional 5 percent when international prices are between $67.3 and $75 per barrel. That then becomes an additional 10 percent when prices are between $75 and $82.2 per barrel and then 15 percent if they climb any higher.
While the Petro administration continues to define a clear energy policy, the anti-hydrocarbon rhetoric continues.
Petro took his message to COP27, the United Nations Climate Change Conference held in Egypt last month, where he presented a 10-part treatise for combating climate change. Recommendations included ceasing all international financing of hydrocarbon projects and donating millions of dollars annually to protect the Amazon rainforest.
During the speech, Petro encouraged governments to generate a global plan to disconnect hydrocarbons immediately.
“Decarbonization is a real and profound change in for the dominant economic system,” he said. “Now is the hour of humanity and not of markets.”
Petro was so focused on delivering the address that he missed the group photo with other presidents attending the event.
In addition to presenting his plan for climate change Petro criticized the UN for failing to act after previous climate change summits.
“The central problem facing humanity today is that we have lost political leadership of an essential process – the process of decarbonizing the economies, without which we will not solve the climate crisis,” he said, “We are worse today than when the first COP was held.”
The Industry Response
While Petro spoke at COP27, energy sector leaders gathered in Bogota for the V Petroleum, Gas and Energy Summit, organized by the Colombian Petroleum Association (ACP); the Colombian Chamber of Oil, Gas and Energy Goods and Services (Campetrol) the Colombian Association of Petroleum Geologists and Geophysicists (ACGGP) and the Colombian Association of Engineers (ACIEM),
The Summit, themed “Geopolitics, Energy Transition and Energy Security,” was the first large multidisciplinary industry association event held since Petro took office.
The 3,500 event attendees included union members, business leaders, technical experts, academics and government officials who agreed on the need to advance a joint agenda to combat the effects of climate change while guaranteeing energy security, eradicating poverty and working to meet the UN Sustainable Development Goals.
“The sector is convinced of the need to carry out a fair and orderly energy transition, and in this sense, the ongoing diversification is the appropriate path to achieve the long-awaited transition, ensuring the country’s competitiveness and macroeconomic conditions,” explained Nelson A. Castañeda, executive president of Campetrol.
Summit programming was designed to emphasize the oil and gas sector’s role in the energy transition. Invited panelists included national and international speakers, such as Michael Shellenberger, founder and president of Environmental Progress, Brian Sullivan, executive director of the International Petroleum Industry Environmental Conservation Association, and Sandra Vilardy, acting minister of the environment.
The event provided the opportunities for professionals like Augusto Carvalho, Latin America carbon capture and storage business development director for Latin America of SLP, who attended the event and delivered two presentations, “Innovation Driving the Improvement in CO2 Capture Performance” and “End-to-End solutions to reduce Carbon & Methane Emissions.”
Carvalho noted that Colombia emits a very low amount of greenhouse gases, and that the country could lead the region and the world in renewable energy.
“Colombia’s energy mix is very clean with almost 70 percent of the energy coming from hydraulic power,” he said.
“Colombians should be proud of their existing energy sector; however, there are still opportunities for collaborating to emissions reduction in different sectors, including oil and gas. Every nation shall devote efforts to the global warming control and Colombia has the potential to be among the leading countries, as a one of the cleanest industries in the world.”
Minister Vélez addressed the Summit and detailed her plans for a “Fair Energy Transition” that ensures energy security and accelerates the development of clean energy projects.
She also referenced the Ministry’s work with ANH to reactivate exiting exploration contracts suspended.
She did not mention new exploration contracts.
Ecopetrol President Felipe Bayón shared a detailed presentation about the company’s energy transition and social development projects, as well as the natural gas potential of the offshore Colombian Caribbean.
“Gas is the backbone of the energy transition, and we have gas in Colombia. The gas potential of the north of the Colombian Caribbean would make it possible to replace all the current gas reserves in the country,” he said.
Bayon repeated, “We have gas,” more than once during this closing address. While he did not mention the Vélez’s comment about importing gas from Venezuela, the audience understood the message.
ACP President Francisco Lloreda was more direct in his address, warning the Colombian government against repeating the mistakes of European countries who stopped producing gas domestically, relied on imports from Russia and had supplies cut off during the war with Ukraine.
“We know that Maduro is no more reliable than Putin,” he said, referring to the Venezuelan president. “He pays late and doesn’t follow through.”
Lloreda said that if Colombia wants to follow other country’s examples, they should look at Norway, which uses clean energy for domestic production and exports oil and gas to other parts of the world.
He encouraged both Colombian government officials and industry colleagues to continue supporting the oil and gas sector, ensuring that petroleum becomes a source of resources needed to reduce income inequality in the country.
“We must continue believing and investing in Colombia to continue contributing to the development of the country as industry has done for more than 100 years, with a special emphasis on overcoming poverty,” he said. “Tax contributions, royalties and dividends from the industry must be focused on this. We are in tune with the national government on that – oil to eradicate poverty, that must be the obsession.”
Lloreda encouraged the oil and gas industry to be open to dialogue, and he urged the Colombian government to have a “responsible” energy transition policy.
“Colombia can advance a comprehensive transition agenda and develop other sources of energy by strengthening its oil and gas industry. A responsible energy transition, aligned with a diversification of exports that must be considered based on a productive transformation in which the economy grows; and a fiscal system that will eventually allow the resources that the industry brings to the country to be replaced, without sacrificing security and energy sovereignty, or giving up exporting oil and gas, and the right of millions of Colombians to live better,” he said.
Roy Barreras, president of Colombia’s Congress, also addressed the Summit, and he highlighted need to work jointly with the oil and gas sector, which has an important role in the transition.
“Without oil and gas there is no transition,” he said, adding that the word “transition” implies gradual change.
“We are building a homeland and making a democratic transition that sets institutional challenges in favor of Colombia. Climate change is inevitable, and the human species can disappear, we are not going to sit back and wait,” Barreras said. “We must lead the transition, which must be done in 15 years and not in 15 days.”