Colombia’s changing hydrocarbons sector

February 4, 2025

Nelson Castañeda Barbour, executive president of the Colombian Chamber of Petroleum Goods and Services (Campetrol), discusses trends in Colombia’s oil and gas sector, the key pathways to boosting production and the benefits of the country’s planned natural gas infrastructure.

Drilling new wells is crucial for exploring and expanding oil reserves. According to the latest information from the ANH [National Hydrocarbons Agency], Colombia’s oil and gas reserves are down to an R/P ratio of 7.1 years for oil and 6.1 years for gas. These reserves are the basis for future oil production and, without the signing of new contracts, the fiscalised oil production could be affected in the medium term.
From January to July 2024, oil production averaged 781,000 bopd, showing an increase of 0.8% year on year. This production is impacted by social conflict and uncertainty that affects investment. Given that, if Brent prices – which from January to July 2024 hovered around USD 83 – were to fall due to geopolitical issues, the scenario would become even more difficult for the industry.

KEY TARGETS: In addition to seeking to generate an increase in reserves through the development of current mature fields and improved recovery, there are two important targets for Colombia: offshore and unconventional fields.
While the country has strong hope for offshore gas potential, it also needs to continue advancing projects aimed at developing its unconventional reservoirs. Some of these have been identified in the Middle Magdalena Valley and Cesar-Rancheria basins, where the most appropriate way to explore horizontal drilling with multistage hydraulic fracturing technology is through properly controlled and monitored pilots.
In Colombia, we have pilot projects such as Kalé and Platero, which have secured investment commitments for the implementation of this technology in the municipality of Puerto Wilches. These projects are included in the Comprehensive Research Pilot Projects (PPII).
Additionally, Colombia’s Office of the Comptroller General in its report entitled “Seguridad y Confiabilidad Energética en Colombia” [Energy Security and Reliability in Colombia] says, “Special attention should be given to P90 reserves, which are the best calculated and amount to nearly 18 billion barrels of oil equivalent. This is nine times the current reserves the country has, and it’s a potential that should not be underestimated.”

NATURAL GAS TRENDS: In the last 10 years, Colombia has experienced a 57% decrease in its 1P reserves of gas, going from 5,508 bcf [156 bcm] to 2,373 bcf [67.2 bcm]. This reduction is reflected in the R/P ratio, which fell from 12.1 years in 2013 to 6.1 years in 2023. This becomes important in a context where, on the one hand, a production decline is anticipated in mature fields that are key sources of national supply such as Cupiagua, Cusiana, Chuchupa and Ballena, while on the other hand, announcements in 2023 of promising offshore discoveries suggest a possible significant boost for gas reserves in the future.
According to the ANH, from January to July 2024, commercialised gas production average was 986 mcf [27.9 mcm] per day, representing a decrease of 7% with respect to the same months in 2023. Meanwhile, the gas demand average from January to July 2024 reached 1,082 mcf [30.6 mcm] per day, marking a 15% increase over the same period in 2023. From August 2023 to April 2024, the thermal generation sector experienced the highest-ever growth in natural gas consumption; the average was 372 mcf [10.5 mcm], registering an increase of 127% year on year. This increase is mainly due to the greater use of natural gas in thermal power plants for electricity production, driven by the lower availability of hydroelectricity due to the drought affecting the country. As a result, natural gas imports have been increasing sharply.

 

OFFSHORE DYNAMICS: Regarding the development of offshore projects in the Colombian Caribbean, we have several challenges and accompanying solutions. In the first place, we have the reduction of the environmental licensing and prior consultation time, for example. Ecopetrol proposes a reduction from three to 1.5 years.
Secondly, there is the evacuation of the gas. To enable this, asset integrity works are an option to support the use of existing infrastructure, along with the construction of new evacuation facilities if the project is successful.
Thirdly, there are challenges in terms of the environmental and regulatory situations. We support ensuring both safe operations and a favourable regulatory environment. It is crucial to continue seeking new discoveries and strengthening exploration activity. These actions are fundamental to reactivate deepwater exploration and production, which will allow us to achieve the increase in reserves needed to maintain self-sufficiency in hydrocarbons.
It is also essential to invest in the construction and improvement of infrastructure for the transportation and distribution of fuels, considering the new projects and production centres in the northern part of Colombia, where gas is a key focus. This implies expanding and maintaining oil and gas pipelines.

A PLAN FOR GAS: In the Natural Gas Supply Plan 2023-2038, firstly, the conversion of transportation infrastructure has been proposed. The alternative proposed is the conversion of infrastructure currently dedicated to the transportation of crude oil to dedicate it exclusively to the transportation of natural gas. This approach optimises construction time and costs and avoids the social and environmental impacts associated with the construction of a completely new hydrocarbons transportation infrastructure.
Additionally, it brings as a benefit the expansion of the transportation capacity. This could encourage the connection of existing fields that lack transportation infrastructure or that are located far from the National Transportation System, the SNT, in such a way that the injection of gas into the system becomes feasible. In the same sense, the implementation of this alternative could facilitate the development of new sources of local production, such as those from offshore discoveries. Likewise, it would also encourage the construction of private LNG import projects.
Secondly, there is the Northwestern Gas Pipeline: VIM-Inferior [Valle Inferior del Magdalena] connection. This pipeline connects the current and future supply from the Lower Magdalena Valley, Sinú-San Jacinto, offshore discoveries and gas imported from the Atlantic Coast to the Middle Magdalena, and from there it connects to regional transport sections.
Thirdly, we have the onshore connections of offshore finds to the SNT. The supply derived from this type of project would enter the SNT through connections in the Atlantic Coast, from clusters located in the Caribbean called north, south and ultra-deep waters.

A TRANSITIONING SECTOR: The energy transition presents a significant challenge for the oil sector, but it also offers a unique opportunity for innovation and growth. The oil companies that can adapt and thrive in this new environment will be those that embrace innovation and develop new products, services and technologies. There are a number of approaches for seizing this new opportunity.
First, companies can invest in research and development (R&D) of renewable energy and low-carbon technologies. Oil companies can use their resources and technology expertise to develop new energy sources: solar, wind and hydrogen. They can also invest in carbon
capture and storage technologies to reduce emissions from their existing operations. Second, companies can develop new products and services. Oil companies can use their knowledge of chemistry and materials to develop new products from renewable raw materials. They can also develop new services, such as energy storage and grid management.
Third, companies can invest in energy efficiency. Oil players can reduce their own environmental impact and improve their profitability by investing in energy efficiency in their operations. This can include: improving the efficiency of their refineries and power plants or developing more fuel-efficient vehicles.
Fourth, companies can advocate for policies that support innovation. They can work with governments to develop policies that support innovation in the energy industry. This can include policies that incentivise investment in R&D, implementation of new technologies and job creation in the clean energy sector.

About Campetrol 

Founded as a business chamber in 1988, Campetrol represents both local and foreign oilfield services companies operating in Colombia. The chamber works towards the development and sustainability of the hydrocarbons sector, bringing together more than 180 companies with national and foreign capital that, through the offer of goods and services, enrich the industry’s value chain.

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