Overview

[total market size = (total local production + imports) – exports]
Units: USD millions
Source: World Trade Atlas; Industry Associations, Campetrol 

The oil and gas sector is key for Colombia’s national revenue. Although private foreign investment is allowed, all the country’s refineries are 100 percent owned and operated by the Colombia National Oil Company, Ecopetrol. The company also operates approximately 64 percent of the country’s total oil and gas production. The remaining share is primarily made up of smaller independent producers of which Canada-based Frontera Energy (formerly Pacific E&P), UK-based GeoPark Holdings and U.S.-based Occidental Petroleum have the most share. The latest onshore bidding rounds in 2021 attracted 30 bids from seven companies, including several new firms to the market. On the natural gas market, the second largest producer is Equion Energy, which is a subsidiary of Ecopetrol and Talisman Energy. The largest private company operating in the natural gas sector was Chevron, which produces via its Guajira association contract alongside Ecopetrol.

The government’s role is largely reserved to regulating oil and gas developments of private investors in the sector, through joint venture (JV)s or individual companies who are permitted to explore and produce hydrocarbons within Colombia. The company or entity must be registered with the Ministry of Mines and Energy (MinEnergy) as an exploration and production company to participate in the domestic market.

There are still several hurdles from municipalities opposing extractive industry activities, extensive timelines for environmental licensing and ongoing attacks to the country’s energy infrastructure from insurgency groups like the National Liberation Army of Colombia (Ejército de Liberación Nacional, ELN). Operating companies also have high production costs and face relatively high taxes. 

During 2021, Colombia reached an average production rate of 736,400 barrels per day, a decline from 2020 which was 781,300 barrels per day, corresponding to a 5.7 percent reduction. Furthermore, average natural gas production reached 1.8 billion cubic feet per day in 2021 with Ecopetrol and its subsidary Hocol leading the production, an increase from 2021 which was 1.1 billion cubic feet per day.

Under former President Ivan Duque, the Government of Colombia (GoC) aggressively promoted investment in offshore oil and gas exploration. It also moved forward with pilot projects in exploration and production of unconventional hydrocarbons to help increase the country’s reserves of crude oil and natural gas to reduce the risk of becoming net importers of hydrocarbons.  

According to Fitch Solutions Macro Research, at the current rate of production (around 700,000b/d), Colombia has only sufficient crude oil reserves for 6.3 years of production. A similar picture emerges for gas, which has only 7.7 years of production in reserves. There is scope for growth over the latter stages of the forecast period (2026-2031) given recent regulatory changes regarding unconventional oil (and gas) pilot projects. Natural gas reserves are likely to grow from 0.11tcm in 2020 to 0.17tcm in 2030 given the prioritization of oil production and a potential for new discoveries in the offshore Caribbean blocks.

Leading Sub-Sectors

• Seismic activity services (two and three-dimensional)
• Drilling equipment (including directional drilling) and drilling fluids
• Wellhead equipment (Christmas trees, valves, compressors, pumps, piping equipment, safety equipment, well completion, casing, and cementing equipment)
• Improved production stimulation and artificial lift systems
• Enhanced oil recovery for selected fields
• Crude oil and natural gas pipeline design and construction services
• Filtering or purifying machinery

Opportunities

In July 2020, the Ministry of Energy issued Resolution 40185 in which it established the technical rules for the unconventional hydrocarbon pilot projects.  Currently, only two companies, Ecopetrol and ExxonMobil, are developing unconventional hydrocarbons pilot projects in the hope they can transition into shale oil and/or gas production in the future. This technique remains unpopular in Colombia and is subject to repeated legal challenges. These projects would initially focus on the Cesar-Rancheria and Middle Magdalena Valley basins (Platero and Kalé). The projects aim to develop a critical baseline of information on the basins, groundwater, seismic data, operational development, and other critical information that would assist in a more transparent development of  unconventional resources.

The GoC is committed to decarbonizing Colombia’s energy matrix by transitioning from liquid fuels to natural gas and electricity as the primary energy sources for the transportation, industrial, and residential sectors. Colombia’s limited reserves and decline in production might lead to increased imports of natural gas in the coming years. Opportunities may arise for U.S. exporters of natural gas.

The GoC announced a tender to develop a second LNG import facility in Buenaventura on the Pacific coast. Additional pipeline infrastructure is also needed. The Buenaventura tender has been delayed several times as the government works to structure incentives.

Ecopetrol plans to pursue upgrades by the end of 2023 to their Barrancabermeja refinery with investements around USD 780 million. The projects will focus on conserving water, reducing emissions, and improving quality of fuel production, among others.

Ecopetrol has their own supplier management system. Companies interested in becoming a supplier need to register with SIPROE, the supplier management and registration platform used by Ecopetrol.  

At COP26 in November 2021, Colombia joined the Global Methane Pledge and in February 2022 signed a resolution (resolution 40066) to reduce methane in the hydrocarbons sector. The goal is to reduce emissions by 11.2 tons of CO2 equivalent by 2030. The resolution establishes the technical requirements for the detection and repair of leaks, burning and venting of natural gas. In addition, it seeks to reduce the waste of natural gas to contribute to mitigation measures against climate change, by reducing greenhouse gas emissions. For the implementation of this resolution, the National Hydrocarbons Agency (ANH) announced it would publish its rules in August of 2022, for the delivery and reporting by companies of the Natural Gas Leak Detection and Repair Program. This program will offer opportunities for U.S. exporters of methane reduction technologies within the hydrocarbon sector.

Trade Event

V Cumbre de Petróleo y Gas (V Oil and Gas Summit)

November 15-18, 2022 

Agora Convention Center Bogota

Bogotá, Colombia

For additional information, including market analysis, trade events, and the products and services that the U.S. Commercial Service can provide to help you succeed in the Colombian market, please contact:

U.S. Embassy Bogotá

Norcia Ward
Oil and Gas Sector Lead

Norcia.WardMarin@trade.gov      
+57 601 275-2703
https://www.trade.gov/colombia