Investors interested in Colombia’s energy sector are in a wait-and-see mode as the new government continues to settle in, Colombian Petroleum Association (ACP) Executive President Francisco José Lloreda Mera told Hart Energy during CERAWeek by S&P Global.

The hesitation comes amid policy signals that point to a shift in what relates to energy as a whole and hydrocarbons in particular, Lloreda said Mar. 6 on the sidelines of the annual event in Houston. 

“But, certain members of the government understand and acknowledge the importance of oil and gas not only from an energy security point of view but from a fiscal and financial point of view,” Lloreda said. 

As a result, the decision for now is “to concentrate on the exploration and production contracts that are in place, which is one of the aims of the current minister of mines and energy.”

The plan for now, as dictated by the ministry of public finance, is to monitor the evolution of the contracts to make decisions this year or next. “That’s why there’s a blend of uncertainty and an observation to see what happens,” Lloreda said.

Colombia isn’t blessed with the same resources as its neighbor Venezuela and continues to struggle to boost its oil and gas reserves and production. Based on current production rates, the country’s oil and gas reserves are both expected to run out in less than 10 years. Colombia’s state oil giant Ecopetrol produced 709.5 MMboe/d in 2022.

The previous government, under then-President Ivan Duque, boosted exploration efforts and attracted investor capital with an aim on energy self-sufficiency and energy security. The current government of current President Gustavo Petro has mostly spooked investors with his comments against fracking and even potentially new exploration.

Many Colombians and energy sector investors fear a repeat of what happened in Venezuela under late president Hugo Chavez, who inherited state oil company PDVSA’s production of almost 3 MMbbl/d, only to see it dwindle. In January, Venezuela produced just 686,000 bbl/d, according to OPEC’s most recent Monthly Oil Market Report and based on secondary sources, due to years of corruption and oil rents mismanagement, among other issues. 

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The Venezuelan economy, heavily dependent on the oil sector, has suffered from a decline in its oil rents due to the ongoing political and financial crises which have led to the departure of around 7 million citizens in recent years, according to U.N. reports.

Amid the mass exodus of Venezuelans, with the largest percentage heading to Colombia, many Colombians fear the country could follow Venezuela’s lead.

“Without a doubt and not only in the energy and hydrocarbon sector,” said Lloreda, who heads the Bogota-based group, referring to those concerns.

“There is worry in the health care sector, in the social security and pensions sectors, in different productive sectors… and clearly the reference of what happened in Venezuela is very present in [the minds] of many Colombians because many want Colombia to follow Venezuela’s lead or because others don’t want that this [to] happen. Of course, from the institutional [point of view], we consider that it’s not the example to follow so all the alarms have been activated.”

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