News and AnalysIs for

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.

Last year, we guess BP tired of doing the industry’s statistical gathering for free. Whatever the reason, it spun out the division doing this work and the Energy Institute took over creating and publishing the Statistical Review of World Energy Data.

We used to joke about the Colombian government’s “Magic Formula” which it supposedly used to set gasoline and diesel prices. Events of the past few years have proven that, if there ever was a “magic formula”, governments abandoned it in the pandemic. Politicians set prices using political criteria (what a surprise!) and economics or finance play a limited role. Now the Petro government sends signals that it plans a radical restructuring of fuel pricing and we think it shows it / his thinking about the broader energy sector.

In its passion to avoid auctioning additional oil and gas exploration contracts, the Petro government wants to revive 39 blocks that the ANH has suspended at the companies’ request. Is there really an opportunity to “return the suspension request to sender” and create new reserves and production? And if so, how much production could be affected?

Early in the month, the Colombian government and the ELN signed a ceasefire protocol which supposedly will let them negotiate substantial issues without the pressure of violence. We’ll see how that goes.