Colombia future Latin American oil powerhouse


Colombia has a respectable tradition in oil production. Nonetheless, it has never reached the status of heavyweight in the market. Its reserves pale in comparison to that of neighbor Venezuela. However, this has changed over the past two decades, as the production drop on the other side of the border has provided the Colombian industry greater relative weight. On the other hand, it also has enormous potential for alternative energies. Now the next step for the nation is to consolidate in the use of these alternate sources.

Ecopetrol recently revealed its 2018 results, where it highlights that the average life of oil reserves grew from 5.8 to 6.3 years; that is to say, that without additional discoveries it would maintain current production levels during the aforementioned period. In addition to the earnings, the rise of crude exports also stands out. Exports stood at $9.2 billion, up by 25% from 2017. The company’s share in foreign sales was 22.1% last year.

This is the oil company’s best result since 2015 when profits from oil exports stood at $8.3 billion. These figures are just a sample of Colombia’s growth in the oil sector in recent years, a process that is leading the South American nation to become a benchmark in the region’s hydrocarbon industry.

A modest past

Indeed, Colombia is not a newcomer in the oil business. Its first major discoveries date back to the late 1910s in Barrancabermeja, Santander Department, regarded as the “cradle of oil” in this nation.

Colombia’s oil industry officially began its activities in 1918, when the Infantas well was drilled. Infantas had an initial capacity of 2,000 barrels per day, which was by no means negligible for the time. Furthermore, in 1921, the country commissioned the Barrancabermeja refinery.

On the other hand, it began the construction of its first oil pipeline to take the crude to Mamonal, near Cartagena. It was a 538-kilometer line with 10 pumping stations that on June 10, 1926, made way for another important milestone: the first export to the United States, sending 88,172 barrels to the northern country.

This pipeline had an initial capacity of 30,000 barrels per day and a 50-year contract, with the condition that it could be used by third parties.

During the following years, other oil companies arrived in Colombia attracted by the business opportunities, including Texas Petroleum Company, Societé Européenne de Petroles, and Cóndor Servicios Petroleros.

Nationalization of the industry

On August 26, 1951, under President Laureano Gómez, the concessions in this area returned to the State. From this point on, the newly developed Ecopetrol took over operations in Barrancabermeja. Total crude production amounted to 23.6 million barrels that year.

However, and although Ecopetrol installed new plants in the refinery, which it started managing in 1961, production did not increase as fuel consumption grew.

The efforts led to the discovery of the Orito field (Putumayo) in 1963, which contained reserves of up to 240 million barrels. Other discoveries included heavy crude in the Castilla field in the Meta Department and finding the Chuchupa field in La Guajira. Nevertheless, Colombia became an oil importer.

In order to reverse this trend, the partnership contract was created around 1974. This initiative began attracting several companies.

Thanks to this, in 1981, Occidental Petroleum discovered the Caño Limón field in Arauca, a site that contained reserves of up to 1,250 million barrels. This development resulted in a significant production rebound, thanks to which Colombia went back to being self-sufficient in oil.

The 770-kilometer Caño Limón-Coveñas pipeline was inaugurated in 1985. That year, production stood at 64 million barrels a year. It later went up to 137 million in 1988 and 155 million in 1991.

Nonetheless, and despite all efforts, Colombia far from being a leader in the region’s energy sector.

A change of scenery

During those years, Ecopetrol failed to grow. This was in part due to the fact that the profits were almost entirely transferred to the government. But with the new century came a new organization. The National Hydrocarbons Agency was created in 2003. This institution was assigned the responsibility of signing and managing contracts and boosting the industry during the strong momentum of high prices between 2004 and 2016 when they plummeted to $30. Indeed, this drop affected the oil industry, not just in Colombia, but in many other producing nations as well. In spite of this, the country has managed to maintain the drive in recent years.

Thanks to this, Ecopetrol reached its annual production target of 720,000 barrels of oil equivalent per day in 2018.

To this end, it increased its total annual investment by 32%. 81% of said investments were focused on the exploration and production segment. On the other hand, 94% of investments were made in Colombia and 6% correspond to the Gulf of Mexico, Brazil, Mexico, and Peru.

In 2018, Ecopetrol drilled 17 wells in Colombia, exceeding its goal of 12 wells, with a geological success rate of 46%.

The company’s goals for 2021 include reaching an organic production of 750,000-770,000 barrels of oil equivalent per day.

A promising future

There are reasons to be optimistic regarding Colombia’s future in oil. Beyond prices, structural factors indicate a sustained rise in the sector. And Ecopetrol is moving in that direction.

One of the most influential factors comes from the neighboring country. It is no secret that Venezuela’s production has declined recently. Although the Caracas government refuses to disclose official figures or presents them partially, secondary sources suggest that production could be about to fall under one million barrels per day.

Recent OPEC data states that production levels stood at 900,000 barrels per day in March 2019 and internal PDVSA labor union sources even ventured to calculate that it stood at 500,000 bpd due to operative problems generated by the power outages the country went through that month.

On the contrary, Colombia has been increasing production, standing near 800,000 bpd. It is still below Venezuela, but getting closer to “crossing the line,” (which could be happening right now, considering the possible effect of the electricity crisis).

Venezuelan presence in Colombia

An additional element comes into the equation. Part of the Venezuelan oil experts that were fired from PDVSA during the political purge led by the government of Hugo Chavez have migrated to Colombia, where they are contributing to the sector. Some are working from Colombia. Others provide consultancy services from Venezuela.

An example of this is Vetra, a Venezuelan company focused on oil exploration and exploitation. It is run by engineer Gustavo Dalence, a former PDVSA directive who now lives in Bogota.

Dalence, who worked in PDVSA for 25 years, estimates that about 500 to 600 Venezuelans are working in the Colombian oil industry. This figure is tripled by the number of specialists that offer consulting services from Venezuela.

More examples

Another example is the case of Ronald Pantin and José Francisco Arata, two former PDVSA managers that migrated to Colombia. There, they joined another Venezuelan, Miguel de la Campa, who was living in Bogota. Campa’s training in international economics at Georgetown University focused on oil and mining development and funding.

Together with Serafino Iacono, a Venezuelan with extensive experience in the equity market that also lived in Colombia, they partnered with Meta Petroleum, the company that back then operated the Rubiales field, in the Meta.

Rubiales was discovered in 1982 but was abandoned due to the high costs of extracting heavy crude and threats from the FARC. Nonetheless, Germán Efromovich, owner of Avianca, purchased it in 2001.

This merger saw the start of Pacific Rubiales Energy Corp. Efromovich held onto a small share, while the remaining four partners became majority shareholders and directives.

The firm’s goal was to become the fastest growing oil and gas company in the country. It would become the second largest operator after Ecopetrol.

The formula is simple: cutting-edge technology and PDVSA’s know-how applied to rich soil, still not exploited to its full potential.

Attractive for Investment

This way, for now, Colombia is aiming to become one of the main five sources of crude oil imports to the United States, behind Canada, Mexico, Saudi Arabia, and Iraq.

Little by little, it is taking Venezuela’s place. The trend seen in recent years clearly shows how one country is continuingly losing ground to the other.

According to industry sources, nearly 90% of the hydrocarbon companies in Colombia reveal that the country is regarded as attractive for business thanks to its geologic potential, fiscal and contractual policy, social aspects, and regulatory stability.

On the other hand, its overall production reached 883,239 barrels per day late last year. According to the Ministry of Mines and Energy, this growth stems from the optimization at the Yarigui-Cantallo, Tigana, Jacana, Akacias, Quifa, Castilla Norte, Chichimene SW, and Acordionero fields, as well as the reactivation of the Kona, Campo Juglar, and Jaspe fields.

Coal as a business

But Colombia’s future in energy doesn’t solely depend on oil development. Coal also constitutes an important factor in the equation to measure the South American nation’s potential.

With an annual production of nearly 85 million tons, coal stands as the mining product that generates the highest contributions to Colombia’s GDP, accounting for 15 to 20% of its GDP in the mining industry and 1.5 to 2% of the national GDP.

The country’s coal reserves currently stand at 6,500 million tons with potential resources of around 15,000 million tons, which accounts for 90% of metallurgical coal and 47% of the thermal coal in the region (Center, South America, and the Caribbean).

90% of Colombia’s coal production is extracted from the Cesar and La Guajira mining areas by multinational companies for thermal use and are mostly exported through the Santa Marta and Puerto Bolívar ports. The remaining 10% of the production is generated by small and medium miners at the Córdoba, Cundinamarca-Boyacá, Santander-North Santander, Antioquia, and Valle-Cauca mining areas.

Variety of uses

These are thermal coals. Nonetheless, the coal extracted at Santander- North Santander, Boyacá, and Cundinamarca also has high-quality metallurgical uses and is exported as well as used in the domestic industry.

Colombia’s National Mining Agency reported coal accounted for 89% of mine royalties in 2018, even though production was affected by the rainfall that interrupted operations in projects located in the northern part of the country.

In 2018, exports stood at 86.9 million tons (86,862,110), down by 17% from 2017, when it hit 105.2 mil/ton (105,235,591). Still, sales overseas brought $7.4 billion, slightly above the $7.3 from the year before.

The challenge ahead is to reinvigorate exports, which stood at 445,344 tons in January 2019, well below the 700,928 recorded in December 2018. However, they began to increase in February, reaching 609,045 tons. This is an encouraging figure, compared with the same month in 2018 (536,334).

Alternative energies

Exploitation and production of energy resources in Colombia is mainly constituted by primary fossil resources (93%). The rest is composed by approximately 4% hydropower and 3% biomass and waste.

As to consumption, the country’s dependence on fossil fuels stands at approximately 78%. Nevertheless, it has great potential to develop clean energies from water, wind, the sun, and biomass resources like sugarcane, palm oil, rice, and plantain.

These advantages stem from its location in the Equator, a varied orography, and rich hydrography, conditions which provide its varied weather and ecosystems.

The Colombian territory has an average solar radiation of 1945 W/m2 and average wind speed of 9 meters per second (at a height of 80m) in La Guajira. Furthermore, it has an energy potential of around 450,000 terajoules per year from biomass.

There is, then, a wide spectrum of alternative energies to develop. This is a sector where, so far, Colombia has given timid steps forward, in spite of its considerable potential.

Wind Power

When it comes to wind power, the Colombian territory, as a whole, does not stand out among the top producers. However, certain regions have significant availability, including La Guajira and a large portion of the Caribbean region, as well as some sectors in the departments of Santander and North Santander and specific regions in Risaralda and Tolima, Valle de Arauca, el Huila, and Boyacá.

All of them have exploitable resources, which in the specific case of La Guajira are among the most valuable in South America.

This department has some of the strongest trade wind regimes in the country throughout the year, with average speeds nearing 9 m/s (at a height of 80m) and prevailing winds in the East-West direction.

Estimates from Colombia’s Energy Mining Planning Unit (UPME) indicate that these winds represent an energy potential that can be translated into an installable capacity of 18 GW.

This is nearly 1.2 times the capacity installed in Colombia’s National Interconnected System, which is 1,500 MW.

Additionally, if we add the rest of the Caribbean coast, where trade winds present slightly lower speeds than La Guajira, the potential in the entire Colombian Caribbean would amount to an installed capacity of 20 GW.

In light of this considerable potential, Colombia’s large utilities, along with other minor companies and foreign firms, nowadays have stations and measurement projects focused on the Costa Norte region, and La Guajira, with plans to eventually develop wind power generation projects in these areas in the short and medium term.

Solar Energy

Given its geographical position, Colombia has constant solar radiation throughout the year, especially in regions like La Guajira, Atlántico, Antioquia, and Valle del Cauca.

La Guajira, a great part of the Atlantic Coast, and other specific regions in the Arauca, Casanare, Vichada, and Meta departments, among others, present average radiation levels close to 6.0 kWh/m2/d. These levels are comparable to some of the regions with the best solar radiation in the world, such as the Atacama Desert in Chile or Arizona and New Mexico in the United States.

On the other hand, regions such as the Pacific Coast receive low radiation levels that stand below the average and are still, for instance, over annual levels recorded in Germany.


In Colombia, approximately 1.3% of the electricity generated in the National Interconnected System corresponds to biomass, mainly from sugarcane bagasse.

On the other hand, the share of biofuels in the nation’s energy mix contributes around 4.8% of the final energy consumption in the transportation sector and 7.04% in the case of land transport.

In this sense, the challenges are in the development of comprehensive schemes for biomass residue management that include energy yield.


While Colombia is not among the countries with the highest potential to exploit the geothermal resource, it does have specific areas, including the volcanic zone of Nevado del Ruiz and the area of influence of volcanoes Chiles, Cerro Negro, and Azufral at the border with Ecuador. In these areas, the resource can be used to generate dozens of MW at a very low production and operation cost.

Energy development

This is how Colombia is consolidating itself as a major player in the energy business. On one hand are the production development and use of fossil fuels, where it has made significant progress and is set to face greater challenges.

On the other hand, it has a wide variety of options with regards to alternative energies.

In this field, while the road traveled is modest, the country presents a remarkable potential. Whatever happens in the near future will depend not only on rising investments and new project development. It will also play a primary role in the country’s politics and its growing relationship with its main commercial partner, the United States, as well as the alliances that it will strengthen with its northern neighbor, the European Community, and Asia in key areas, like technological development.

You can find these and many other interesting articles in the most recent printed edition of Energía16

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