The government’s decision not to award new oil contracts brought a cloud of uncertainty for companies that have been investing in the country for years. But beyond the announcement itself, what causes the most concern is that this measure is based on a document that has been in the midst of controversy.

First, because its preparation was attributed, among other people, to the former director of Hydrocarbons, Camilo Rincón, who assured that this was not true and that he did not authorize his name to be included as co-author of the ‘Balance of hydrocarbon contracts and resources available for the energy transition.

(You can also read: Creg responds to Petro: ‘Regulatory bodies must be independent’)

Meanwhile, the Vice Minister of Energy, Belizza Ruiz – who was asked by the President to resign on Friday – said that she knew the full report only until it was published, but it «has technical, economic and methodological problems.» And Minister Irene Vélez assured that it was decided that Ruiz did not participate in its drafting «because we should speed up the power to make decisions on this balance of contracts.»

furthermore, since the Colombian Association of Oil and Gas (ACP) state that this balance is a «superficial analysis» that does not include the macroeconomic and fiscal component, the financing of the regions and productive transformation, especially in the oil areas.

Vice Minister of Energy, Belizza Ruiz.

Photo:

Ministry of Mines and Energy

Uncertainty in figures

This document indicates that, if the contractual stages are successfully developed, the 273 projects underway, both in the exploration and production phases, have the probability of contributing up to 2,033 million barrels of oil in proven reserves, 363 million barrels in contingent resources and 684 million in prospective resources.

In gas, the potential in reserves is up to 3,028 gigafoot, in contingent resources of 2,651 gigafoot, and in prospects of 28,283 gigafoot, including what could be in the discoveries that have been reported in the Caribbean Sea and in the Sinú-9 block. (Cordova).

Although the report says that current contingent Sinu-9 resources can be brought into production as early as 2026 and offshore as early as 2027, these only have a 50 percent chance of success.

Despite this, the Ministry of Mines and Energy infers that these resources «can supply the national demand and, even, produce a surplus in their production until 2037. If we take into account the prospective resources, this supply can be extended until 2042».

However, Camilo Rincón affirmed that he does not have information that gives rise to these projections and «it must be the formulators and structurers of the document (two advisers to the minister) who explain the methodologies and used data for this purpose.»

Since there is still no certainty about these resources and everything is about preliminary estimates, the Ministry will also focus on destroying 32 contracts that have an exploratory opportunity and they are currently suspended due to social conflict (18), public order (10) and environmental procedures (4).

In this way, it will seek to add new reserves to the balance that, according to the National Hydrocarbons Agency (ANH), are 2,039 million barrels at the end of 2021, which will last for 7.6 years. On the gas side, they are calculated at 3,164 cubic gigapietes, with a useful life of 8 years.

By May, the updated reserves report is expected to be released as of December 31, 2022, which will serve as the basis to ratify or not the decision to no more contracts and define whether the existing resources are sufficient to carry out the energy, export, and fiscal transitions. , He said Finance Minister, José Antonio Ocampo.

(Also: The challenges that the new president of Ecopetrol will have, according to Felipe Bayón).

However, for the ACP, the current reserves are not enough to ensure Colombia’s energy self-sufficiency going forward, so it is necessary to continue awarding new contracts to make a transition.

In this sense, the president of Naturgas, Luz Stella Murgas, said that it is key to maintain exploratory activity, since «tomorrow’s energy security is guaranteed with more exploration starting today.» In addition, the investments and results of these explorations are not immediate but in the long term.

According to the ACP, the exploration and production of hydrocarbons is essential to guarantee the country self-sufficiency and energy sovereignty, in the short, medium and long term, while the responsible transition that is required is carried out.

In addition, the main challenge is not in the diversification of the electrical matrix but in energy, and this will only occur with the transformation of the vehicle fleet, since the country depends on fuels derived from oil and gas for 99 percent.
«There is no need to sacrifice and weaken an industry that is so important to the country, when the reality is that the activity that is sought to be prohibited will not make any difference in Colombia or in the world,» said the president of the ACP, Francisco José Lloreda.

And it is that Colombia contributes 0.37 percent of the planet’s greenhouse gases. Of this, 59 percent is produced by the agricultural and livestock sector, deforestation and misuse of the land, 31 percent is associated with the generation and consumption of different energy sources, transportation being the most significant (12 percent). percent), while hydrocarbons contribute less than 1 percent of total emissions.

But in the country’s economy the contribution of this industry is totally different. About 40 percent of exports depend on this sector, which also provides 20 percent of the Nation’s tax revenue and 76 percent of royalties.

“The decision not to sign more contracts puts the country at serious risk in the face of a possible economic ‘blackout’. The countries are safeguarding their economies, defining a gradual, planned and organized energy transition, in the medium and long term. The Government must review this aspirational decision and rethink the hydrocarbon exploration and production strategy,» said Daniel Medina, president of the Colombian Association of Engineers (Aciem).

Additionally, this union recommends that the Government design a roadmap for the energy transition based on studies that support the figures and clearly support that new hydrocarbon exploration and production contracts are not left over, without affecting the country’s economy.

hit to production

The president of the PCA mentions that not delivering new contracts, sooner rather than later, will also take its toll on oil production, as happened in 2015 when the collapse of international prices put a brake on investment and production fell below one million barrels diaries.

The pandemic was another blow to the industry and led to production reaching over 700,000 barrels. After almost three years, the recovery has been slow and has failed to return to 800,000 barrels per day. Less hydrocarbon production means less income for the Nation, less royalties, less dividends and a risk of losing energy self-sufficiency.

LINA QUIROGA BLONDE
deiqui@eltiempo.com