Macro

Colombia Eyes Energy Deal with Venezuela for Ecopetrol Production

Colombia and Venezuela eye energy cooperation, facing challenges in pipeline repair for gas imports amidst declining reserves.

By Athena Xu

4/10, 16:53 EDT
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Key Takeaway

  • Colombia, under President Gustavo Petro, is negotiating with Venezuela to allow state-controlled Ecopetrol SA to produce oil and gas in western Venezuela.
  • The deal includes Colombia exporting clean energy to Venezuela, highlighting a focus on bilateral energy cooperation despite political tensions.
  • Colombian exports to Venezuela are expected to hit $1.2 billion this year, with a new bilateral commission for food exports via the Meta river soon operational.

Colombia-Venezuela Energy Collaboration

President Gustavo Petro of Colombia announced a potential deal with Venezuela to develop oil and natural gas fields near the Colombian province of Norte de Santander. This agreement, discussed during Petro's fifth meeting with Venezuelan President Nicolás Maduro, also includes Colombia exporting clean energy to Venezuela from La Guajira province. Despite previous tensions, including criticisms from Petro regarding Venezuela's political climate, this deal signifies a move towards closer energy cooperation between the two nations. Colombia aims to balance this with its commitment to phasing out fossil fuels, as indicated by its halt on new oil exploration licenses.

Challenges in Gas Import Plans

Colombia's ambition to import natural gas from Venezuela faces significant hurdles due to the deteriorated state of the connecting pipeline. Industry executive Luz Stella Murgas highlighted the pipeline's disrepair, casting doubt on the feasibility of beginning imports by the year's end as initially hoped by Ecopetrol SA, Colombia's state oil company. This development comes amidst investigations into the pipeline's condition, with reports of sections going missing. Colombia's strategy to counteract its declining natural gas reserves includes offshore development, which requires expedited environmental licensing and regulatory support.

Ecopetrol's Import Strategy Amid Declining Reserves

Ecopetrol SA is exploring various options to import natural gas to address the anticipated shortfall in supply. With Colombian wells in the Caribbean expected to start producing between 2027 and 2029, the company forecasts a 17% average daily demand gap by next year. This situation is exacerbated by the disappointing output from the Orca-1 natural gas deposit and the upcoming drilling of the Uchuva-2 well. Ecopetrol is working with PDVSA, Venezuela's state oil company, to assess and repair the necessary infrastructure for gas imports, aiming for an initial import volume significantly lower than the pipeline's capacity.

Management Quotes

  • Gustavo Petro, President of Colombia:

    "State-controlled Ecopetrol SA could develop 'high quality' oil and gas in western Venezuela under the agreement, while Colombia could export clean energy to its neighbor." "Colombian exports to Venezuela will reach $1.2 billion this year, while imports will be between $200 million - $300 million. A bilateral commission for food exports, via Colombia’s Meta river, will be up and running soon."