The proposal of the candidate for the presidency of the Republic Gustavo Petro in the sense of suspending oil exploration contracts, if elected, does not stop generating controversy in this industrial sector.
(Without oil, the economy would contract 3.3%: how viable is it?).
And beyond its approach, there are questions such as: What would it mean to the country if all oil exploration stopped? And can a President of the Republic order the suspension of the exploration of oil blocks?
When consulting the concerns with several analysts, they explained that, if oil exploration is suspended, not only one sector is affected, but also the entire economy of the country.
“This industry is the main source of current income for the nation, representing in royalties, income, direct transfers from Ecopetrol to the Nation, as well as the country’s main export sector and one of the leaders in foreign direct investment”, said Julio César Vera, consultant and oil expert.
Likewise, the analyst stressed that, even if the Legislature approved a law allowing the hiring, “What investor would believe in a country where the Government is opposed to assigning new areas? Even in the existing ones, resources would also fall, since there would be no confidence in a sector in which measures contrary to the economic and market logic are taken “, said.
(Criticism of Petro for the idea of stopping oil exploration in the country).
In the last three years, the country has signed 39 contracts for the exploration and production (E&P) of hydrocarbons that represent US $ 4.3 billion in investments (offshore, US $ 3,000 million; the Permanent Process of Allocation of Areas (PPAA), US $ 1,000 million; Colombia Round 2021, US $ 200 million; and unconventional pilots (fracking), US $ 100 million).
DROP IN RESERVATIONS
In the same way, another big question has to do with the future of crude oil reserves, especially if one takes into account that the country has 1,816 million barrels for 6.3 years.
“If hydrocarbon exploration ceases, with the current rate of production, in less than eight years the country would deplete its oil and gas reserves, and the country would be faced with a shortage situation that would lead it to fall into a marked external imbalance translated into a widening of the trade balance deficit, a reduction in investment flows and an accelerated depreciation of the exchange rate “, explained Nelson Castañeda, Campetrol’s executive director.
In the same vein, Francisco José Lloreda, president of the Colombian Petroleum Association (ACP), stressed that stopping exploration means that in a few years the country would lose oil and gas self-sufficiency. “In other words, we would no longer produce but we would have to import, which ends up translating into an increase in the price of fuels and public services for Colombians”, said.
The union leader stressed that, in the case of natural gas, in Colombia more than 10 million homes use the fuel for cooking; approximately 25% of electricity is also generated with energy depending on the time of year; and the different means of transport move with fuels.
In addition, Castañeda and Lloreda agreed that, should oil exploration cease, The country would stop receiving important resources, since this industry contributes around 4% of GDP and generates a fiscal contribution of $ 26.2 billion per year, equivalent to 17% of the Nation’s income.
“Fiscal sustainability would be compromised by losing 80% of royalty income and more than 5% of the nation’s total income. All of the above would trigger an approximate annual contraction of 2.5% in real GDP ”, said the director of Campetrol.
For his part, the president of the ACP stated that, “In addition, it generates around 80% of the total royalties that go to all departments, especially to the producing regions that would be left without this income. In other words, it would be condemning Colombians to more poverty, and the country to a macroeconomic and fiscal situation and in its critical trade balance “.
It should be remembered that, for every $ 1 of oil production, demands are generated from other sectors for $ 1.65. In the last 8 years the sector has contributed $ 153 billion in revenue.
LAURA VIVIANA LESMES
ALFONSO LÓPEZ SUÁREZ
