Oil and Gas Companies Cancel at Least 60 Contracts In Colombia

The country’s oil and gas chamber (Campetrol) reports that private companies foresee a 4% drop in E&P investment this year, and a 33% reduction in the budget for the sector

Workers on an oil drilling platform in Colombia.
March 28, 2023 | 06:40 PM

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Bogotá — Hydrocarbon exploration and production (E&P) companies have requested the suspension of at least 60 contracts in Colombia due to public order situations, informed Tuesday the Colombian Chamber of Oil, Gas and Energy (Campetrol).

The companies requested the cancelation of the contracts from the country’s hydrocarbons regulatory body ANH.

In a sectorial report, Campetrol warned about the public order disturbances, acts of violence and attacks on the infrastructure of hydrocarbons companies that have “negatively impacted the perception of security”.

Added to this scenario is the macroeconomic uncertainty caused by high inflation and interest rates, as well as the fiscal uncertainties surrounding the adoption of reforms to the oil and gas sector.

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Campetrol reported that private companies project a 4% decrease in exploration investment for 2023, and a 33% drop in the government’s budget for the sector.

“The viability and security risks in operations due to public order incidents reduce the incentives for investors in the sector to keep their capital in the country,” Campetrol said.

According to figures shared by the chamber, in the fourth quarter of last year, foreign direct investment in the oil and gas sector in Colombia was $416 million, down 46% compared to the previous quarter, and a 5% decrease compared to the same quarter of 2021.

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For Campetrol, lower investment will be reflected in fewer active drilling operation (and maintenance), and as a result less exploration and production.

In said that “drilling activity maintained a downward trend from November 2022 to February 2023, averaging 150 active rigs during the period”.

The tense situation in the country’s oil regions has translated into a blow to production, which was evidenced in February by a decrease in output of 13,600 barrels of oil per day.

Preliminary oil production was 760,000 barrels per day in February.

Meanwhile, “in the first two months of 2023, 10 new exploratory wells were drilled, and 226 km2 of seismic data were acquired, corresponding to 25% and 19%, respectively, of the goal set by the ANH for the year”.