Bloomberg — Ricardo Roa was selected to lead state-run oil company Ecopetrol SA (ECOPETL, EC) as Colombia’s first leftist government seeks to push through ambitious plans to transition the country away from fossil fuels.
Roa will take over from interim Chief Executive Officer Alberto Consuegra after Felipe Bayon, who had held the role since 2017, left at the end of last month. Roa, who will assume the role by April 30, is a mechanical engineer who was previously head of the power company Grupo Energia Bogota, or GEB, at the time when President Gustavo Petro was the capital’s mayor. More recently, Roa headed Petro’s successful campaign last year.
Petro has pledged to phase out the economy’s dependence on oil and coal even though they account for about half of Colombia’s exports. Energy and Mines Minister Irene Velez has stuck with those campaign pledges and so far has halted any new oil and gas exploration licenses in the country, and is only allowing existing deals to continue.
While few question the need for a long-term transition, many investors are concerned Ecopetrol is missing out on a lucrative opportunity to produce as much oil as it can before global demand goes into decline and leaves oil-rich nations with stranded assets. The Ukraine war caused supply disruptions last year and exposed how the global economy remains dependent on fossil fuels.
In a letter posted on Twitter, Roa said that he will take over as soon as possible and will ensure that Ecopetrol guarantees “energy security and equity.” For almost three years until the start of 2022, he headed Honduras’s power utility Empresa Nacional de Energia Electrica.
Roa’s appointment is “market neutral” because it was was widely expected, Daniel Guardiola, an analyst at Banco BTG Pactual, wrote in a report.
His over 28-year experience in the energy sector comes at a time when the “government is pushing Ecopetrol to further accelerate its investments in the so-called low-emission businesses,” Guardiola wrote. But he lacks “knowledge and experience in the upstream sector,” which is Ecopetrol’s core business, he added.
With oil accounting for about 15% of Colombia’s fiscal revenue and 30% of foreign direct investment, Petro’s plans have weighed on Colombian assets. Ecopetrol shares declined sharply ahead of his election and have since leveled out.
Meanwhile, the nation’s local currency bonds have lost 5.5% since Petro won, which compares to a 3.7% gain for emerging market peers over the same period, according to a Bloomberg index.
Soon after the Petro administration took office in August and signaled it wanted to implement a ban on fracking, Ecopetrol scrapped two such pilot projects in the country. The previous administration hoped that the controversial method of oil extraction would unleash new investments and lift production.
--With assistance from Danielle Chaves
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