Colombia’s oil and gas reserves could be revised up this year compared to 2024, but oil output continues to drop amid a hostile climate to oil and gas, social and security issues, and international majors bailing on Colombia.
Colombia’s oil production could suffer another major blow as the investment climate will further sour after the United States this week stripped Colombia of its so-called U.S. Drug Certification. This means that the Trump Administration no longer believes Colombia is fully cooperating with the U.S. counter-narcotics efforts.
The U.S.-Colombia ties have soured since U.S. President Donald Trump took office, and these continuously deteriorating relations hit a new low with the decertification of Colombia for its failure to fully cooperate with the U.S. in the fight against illicit drug manufacturing and trafficking.
The U.S. placed the blame squarely on Colombia’s leftist President Gustavo Petro for failing to control narcotics groups and reduce coca cultivation and cocaine production.
“In Colombia, coca cultivation and cocaine production have surged to all-time records under President Gustavo Petro, and his failed attempts to seek accommodations with narco-terrorist groups only exacerbated the crisis,” President Trump said in the Presidential Determination submitted to Congress on Monday.
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“Under President Petro’s leadership, coca cultivation and cocaine production have reached record highs while Colombia’s government failed to meet even its own vastly reduced coca eradication goals, undermining years of mutually beneficial cooperation between our two countries against narco-terrorists.”
“The failure of Colombia to meet its drug control obligations over the past year rests solely with its political leadership,” President Trump said.
Yet, he praised Colombia’s security institutions and municipal authorities who “continue to show skill and courage in confronting terrorist and criminal groups, and the United States values the service and sacrifice of their dedicated public servants across all levels of government.”
In response to losing the drug certification, Colombia’s Interior Minister Armando Benedetti told a local radio program that “from this moment on…weapons will not be purchased from the United States.”
The new low in the U.S.-Colombia relations adds further headwinds to the already falling Colombian oil production, although the President determined that U.S. assistance to Bolivia, Burma, Colombia, and Venezuela “is vital to the national interests of the United States.”
Colombia’s President Petro has been erecting barriers to oil and gas development since taking office in 2022—and this shows in production numbers and the number of international majors quitting exploration in the South American country.
Colombia’s hydrocarbons agency expects proven oil reserves, those that can be profitably extracted at current oil prices, were 2.04 billion barrels as of last year. These could even be estimated higher this year as new technology and techniques allow for pumping more crude from existing fields, the agency’s head, Orlando Velandia, told Reuters this week.
Oil production, however, has declined by 6%, due to social conflicts and security issues, Velandia said. Guerrilla groups have intensified attacks on pipelines to undermine the government’s authority, according to the agency.
Colombia’s oil production fell by 4.8% to 746,249 barrels per day (bpd) in July from a year earlier, according to data from the hydrocarbons agency. Marketed natural gas production slumped by 16.3% compared to last year and by 6.4% from June.
Colombia’s oil production peaked in 2013, but the decline has been more noticeable under Petro’s government, which increased the barriers to oil industry investors with tighter regulations for conventional oil and gas exploration and a ban on fracking. Stricter regulations, higher taxes, escalating violence, and poor exploration results are prompting the supermajors to abandon Colombia’s oil business.
Major international oil and gas companies have scaled back or quit operations in Colombia’s offshore exploration and production areas.
Colombia stopped awarding new oil exploration contracts while hiking taxes for the economically crucial hydrocarbon sector in November 2022.
The current Colombian administration’s quest to reduce the country’s reliance on fossil fuels has had the opposite effect—it became more reliant on energy imports as falling oil and gas production created energy shortages.
As if domestic policies aren’t enough, deteriorated relations with the United States could signal further setbacks for Colombia’s oil and gas industry.
By Tsvetana Paraskova for Oilprice.com
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