Colombia's Energy Industry

Colombia: diverse energies on the rise

Colombia’s oil and gas sector is a critical part of the country’s economy, representing around 10% of GDP, 13% of FDI and 20%-40% of exports despite dwindling reserves. The country is Latin America’s third-largest oil producer after Brazil and Mexico, with most of its resources bound for export. The industry is overseen by the National Hydrocarbons Agency (ANH), which hands out PSCs and enforces state policies.

To restore its falling reserves, the ANH is focused on organising bid rounds and attracting interest in exploration activities. The state entity set out a roadmap that includes awarding 200 blocks and drilling 800 wells between 2021 and 2040 with the aim of increasing reserves by 150% and making the nation self-sufficient in meeting its hydrocarbons demand. While much of Colombia’s oil and gas resource wealth is hidden in deep offshore regions or in previously inaccessible parts of the hinterland, modern technology and techniques have made E&P activities viable.

As new finds are developed, the country’s leadership targets investments in decarbonisation for these operations. The government also seeks to establish a diversified energy mix where clean energy will make up a 50% share by 2030. It is seeking both foreign and local investment to kick-start this new era of renewable energy production, with the region of La Guajira touted for its major wind and solar potential.

Colombia has five state-owned refineries with a current combined capacity of around 420,000 bpd. The two most important are the Cartagena Refinery and the Barrancabermeja Refinery – operated by Ecopetrol, which together represent around 96% of national capacity.

Due to the lack of developed oil and gas infrastructure, investment in hydrocarbons-related transportation is in high demand. Colombian pipelines are congested, and the State is working to ease red tape to attract international partners to build new assets.

“We want to position Colombia as the main destination for investments in the energy sector in the entire region,” Colombian President Iván Duque told The Energy Year. “For this, we have important fiscal incentives for the hydrocarbons sector and for the alternative energy sector.”