Colombia experienced a dramatic rise in energy production since the implementation of regulatory reforms in 2003. Additionally, appealing fiscal terms, increased security, and a positive reputation for respecting contract sanctity has helped encourage an influx of international companies and investment capital. Colombia’s steadfast economic policies have allowed it to maintain investment grade credit ratings while other hydrocarbon dependent economies in the region have faltered. Furthermore, continued improvements in security are expected to continue with the execution of the peace accord and demobilization.

Natural gas consumption in Colombia has grown, rising by more than 60% in the past decade. Increase in natural gas demand is further supported by the mandate to use gas power in towns with a population of over 5,000. As demand increases, supply continues to fall with Chuchupa, Colombia’s largest gas field, in decline at a rate that required more than 65 MMscfpd to come on stream every year to replace produced molecules. Significant natural gas investment will be required in Colombia to offset the growing demand shortfall.

Favorable investment terms led to Colombia’s crude oil production doubling within the past 10 years, reaching one million bopd in 2013. However, the drop in global crude oil prices since mid-2014 has led to a slowdown in drilling activity and in new investments. As a result, Colombia’s oil production has been stagnant at one million bopd in recent years, and its production is expected to remain flat in upcoming years. According to figures of the ANH average daily oil production during 2016 was 837,000 bopd, and the country exported over half of this (480,000 bopd), ranking as the fifth-largest crude oil exporter to the United States in 2016.

Natural gas investments will be supported by attractive prices that are affected by the gas supply shortfall and the LNG regasification plan pricing at Cartagena. Gas prices are expected to rise from the current level of US$5.00 MMbtu. Additionally, the lack of regional pipeline integration results in localized markets that experience upside potential during surges of high demand. For instance, gas prices reached up to US$15 – US$18/MMbtu during the last La Niña.


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