Petro’s Victory in Colombia Has Not Scared Away Mining, Oil Investments

Investment increased in May and June, despite left-wing Gustavo Petro’s triumph in the presidential elections, bucking a downward trend for the two months that had persisted since 2019

The victory of Gustavo Petro in Colombia's presidential elections has not scared off investors in the oil and gas and mining sectors
August 02, 2022 | 03:55 PM

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Bogotá — Gustavo Petro comes to the presidency of Colombia with clear positions regarding the oil and mining industry, specifically to not carry out fracking, to review current exploration contracts and not sign new ones, among other plans outlined during his election campaign. Such plans have injected uncertainty into the sector, with many calling for clarity regarding the incoming government’s plans, as legal instability could affect investment in the country.

However, despite fears of a dampening of investment, and at least for now, foreign direct investment (FDI) in Colombia’s oil and mining sector has not been affected since Petro’s victory.

In fact, according to data from the Banco de la República (Banrep), FDI in oil and mining has rebounded.

Data from the central bank shows that in May, when Petro secured his place in the second round of the elections, FDI in the oil, hydrocarbons and mining sector was US$691.5 million, while in June such investment rose to $814.7 million, a 17.8% year-on-year increase.

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This variation in FDI in the oil and mining sector is significant, taking into account that such investment has fallen during June every year since 2019, according to Banrep data.

Between May and June 2019, FDI in the two sectors fell 11.1%, from $617.3 million to $548.9 million, while in the same period of 2020 the variation was 22.9% lower, dropping from $286.4 million to $220.8 million.

In May and June 2021, the figures for oil and mining FDI dropped from $364.8 million to $362.1 million, a monthly contraction of 0.7%.


Although it could be argued that the FDI rebound between May and June 2022 is due to a more expensive US dollar, in May the dollar was more expensive than in June. In May the dollar averaged 4,010 Colombian pesos, while in June the average exchange rate was 3,944 pesos.

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According to Ana Vera, chief economist at IN ON Capital, “globally, energy investments are being favored, both in oil and in alternative sources. We have seen an upturn due to the lack of supply and the blockades in Europe due to the crisis between Ukraine and Russia”.

“The behavior in Colombia obeys the international trend, where prices remain at high levels despite the corrections of historical highs, and this benefits the country due to its oil, gas and coal production potential,” she added.

In line with the above, experts from the economic team of Banco de Bogotá highlighted in a report that the favorable momentum generated by the higher prices of raw materials is attracting FDI to Colombia.


“The positive balance is not generalized, because FDI destined to other sectors in June showed declines in annual terms, and which reaffirms that the recovery of investment is evidently the tailwind generated by higher oil prices,” according to the bank’s analysts.

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Finally, it is worth remembering that according to data from the Colombian chamber of the oil, gas and energy industies (Campetrol), in the last decade the oil and gas sector has represented an annual average of 6% of national GDP, 43% of total exports, 26% of FDI, and 9.1% of the government’s total revenues.

In addition, over the last four years, 69 new exploration and production contracts were signed, with investment commitments of around $3.7 billion for the next six years, according to Campetrol.


At the beginning of June, Campetrol told Bloomberg Línea that “if current prices are maintained, annual investments similar to those we will have in 2022 are expected over the next few years, which are estimated at an average of $5.2 billion per year for the entire value chain”.

Gustavo Petro will take office on August 7.

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Translated from the Spanish by Adam Critchley