News and AnalysIs for

Most of the news this month on the Petro government’s “Total Peace” initiative concerned ongoing battles between the various armed groups with civilians the primary victims. Even the Armed Forces violated its trust. But never mind, the negotiations continue regardless.

MinEnergia recently published its draft energy transition roadmap and the attention has focused on electrification for good reason: the Colombian government expects a dramatic increase in the proportion of total energy – including transport – served by electricity. For that, we have written extensively in our sister publication ePowerColombia. But the roadmap makes assumptions about oil and gas demand and supply that could impact the hydrocarbons industry.

The news is full of rising prices and their potential impact on gasoline and the upcoming US elections. But as the lead graph shows, oil prices fell during 2Q23 and that had a parallel impact on netback.

One of the most frustrating aspects of working in the Colombian countryside is the unclear boundaries of “prior consultation”. The constitution and international agreements require ethnic minorities to be consulted on issues that affect them – like infrastructure or resource development – but Congress has never dared to pass a law that regulates what this means. This is partially because such a law would itself have to be consulted before passage and there is a reasonable expectation that the affected minorities prefer the current ambiguity. Without a legal framework, work has progressed based on decrees and administrative procedures. Recently, the State Council nullified one of the fundamental decrees. The team at Brigard Urrutia wrote an opinion on the implications for oil and gas companies.

With the ELN ceasefire starting, this should have been a positive month. It wasn’t. The ELN were doing their usual things to undermine Colombians’ confidence and even the High Peace Commissioner expressed impatience with the dissident FARC.

Ecopetrol’s Net Income looks to fall just over 40% this year with most of the decrease coming from E&P. What causes that? Lower oil prices? Higher costs as President Gustavo Petro turns the NOC into his social agenda’s “petty cash”? Or, as the press release put it, tax reform?

“Both the government and the industry have decided to change spokespersons, which opens doors to new communication within the sector. However, delicate matters like signing new contracts will require extensive efforts from both sides.” We quoted Juan Felipe Neira, a professor at Universidad Externado in an article about Frank Pearl coming to the ACP and a new MinEnergia, Andrés Camacho.

We have been waiting a year to write this article: the impact on Colombian oil and gas share prices – and especially that of Ecopetrol – after a year of the “Illuminati” and President Gustavo Petro (“I’m not apocalyptic”) management of the energy sector. Meh!

Most of you will pick this article up on Tuesday August 8^th 2023 and so Colombia will officially be in Gustavo Petro’s second year as president. Based on what he said in the campaign and announced in his inauguration speech we had certain expectations – perhaps fears. How much has really happened and what can we expect going forward?

I collected a few more articles this month (99) than last month (94) and Colombia had some dramatic incidents. But mostly this month was working through the details of the ELN ceasefire that starts the first week of August. More discussions in Buenaventura and trying to get back to the table with Alias Mordisco kept the High Commissioner and the President busy.