Portal Industrial Cartagena Colombia - Forum - Contacts

The key governmental body involved in Colombia’s energy sector is the Ministry of Mines and Energy, which is responsible for overall policy making and supervision.  All hydrocarbon reserves are owned by the state. Control is exercised in the oil and gas sectors through national companies Ecopetrol and Ecogas. Ecopetrol is the largest and primary oil and gas producer in Colombia, producing 60 percent of total oil production.  It possesses legal existence, administrative and decision-making autonomy, and its own capital.  It is responsible for exploring, extracting, processing, transporting, and marketing of Colombia’s hydrocarbon resources.
Colombia's government has taken measures to make the investment climate more attractive to foreign oil companies. Upstream sector initiatives include allowing foreign oil companies to own 100 percent stakes in oil ventures and compete with Ecopetrol; establishing a lower, sliding-scale royalty rate on oil projects; and lengthening the time for exploration licenses. The government plans to sell shares of Ecopetrol to private investors, reducing its share to roughly 80 percent. These reforms have sparked a renewed interest in Colombia's upstream sector, with record levels of exploratory and development drilling underway. According to the Colombian central bank, the oil sector received $2.86 billion in foreign direct investment (FDI) in 2010.
In June 2010, Colombia’s National Hydrocarbons Agency (ANH) conducted a bidding round, which included 228 exploratory blocks. The round featured both known hydrocarbon-rich areas as well as frontier regions in offshore blocks in the Caribbean Sea and the Pacific Ocean.  However, the ANH only awarded 76 total licenses in well-established areas in the round.  A new bidding round was opened in February 2012, which focused on the exploration and development of nonconventional gas sources. One-third of the 110 blocks offered are believed to contain shale or coal bed methane gas. To attract investment, the government decreed a 40-percent discount on royalties from nonconventional gas at the end of 2011. The auction will also include 13 mostly deepwater offshore blocks with crude oil and natural gas indications.

Colombia produced 923,000 barrels per day (bbl/d) of oil in 2011, up 35 percent from the 595,000 bbl/d produced in 2008. This rising production trend is continuing.  Most recently, the Ministry of Mines and Energy reported that Colombian production reached 951,000 barrels per day in March 2012, and that production is expected to reach 1 million bbl/d by the end of 2012 and 1.5 bbl/d by 2020. Colombia consumed 298,000 bbl/d in 2011, allowing the country to export most its oil production.
Prior to 2008, Colombia’s oil production had been largely flat for many years, following a period of steady decline that started in 1999, when Colombia’s oil production peaked at 830,000 bbl/d. The principle cause of the fall in oil production was natural declines at existing oil fields and a lack of sizable new reserve discoveries. However, a combination of changes to the regulatory framework and an improved security situation has contributed to increasing investment in the country by international oil companies. Pipelines and other energy infrastructure are still the targets of attacks by anti-government guerrillas, but the number and severity of these attacks is lower than in the past. According to the Colombian government, there were about 31 attacks against pipelines in 2010, and 84 attacks in 2011, a significant increase, but it did not affect export levels.  This is compared with hundreds of such incidents that occurred per year in the early 2000s.

The largest producing oil field in the country is the Rubiales heavy oil field, located in Meta department, and operated by partners Pacific Rubiales and Ecopetrol. Low levels of production began at Rubiales in the late 1980s, but increasing investment and the completion of a new pipeline have allowed production rates to rise in recent years. Gross production at Rubiales exceeded 124,000 bbl/d in 2010, up from 37,000 bbl/d in 2008. Other large oil fields include Cano Limon, Castilla, and Cupiagua. Cano Limon is operated by Occidental, which discovered the field in 1983. The Cusiana/Cupaigua complex has recently experienced a comeback to over 100,000 bbl/d of production after years of steep declines to less than 50,000 bbl/d.

The United States is the top destination for Colombia’s oil exports. In 2011, Colombia exported 422,000 bbl/d of crude oil and refined products to the United States. In 2010, the U.S. was Colombia’s top oil export destination, followed by China, and Japan. China has recently expressed interest in financing new infrastructure projects in Colombia to facilitate the transport of oil to the Pacific coast for export. In May 2012, it was reported that preliminary agreements were signed for China Development Bank to finance a 600,000 bbl/d pipeline to transport Colombian and Venezuelan oil to the south Colombian Pacific coast.

According to the Oil and Gas Journal, Colombia had proven natural gas reserves of 4.7 trillion cubic feet (Tcf) in 2012, up from 4 Tcf in 2011. The bulk of Colombia's natural gas reserves are located in the Llanos basin, although the Guajira basin accounts for the majority of current production. Natural gas production, like oil production, has been rising substantially in the last few years owing to increasing international investment in exploration and development, rising domestic consumption, and new export opportunities.

Colombia produced 398 billion cubic feet (Bcf) of dry natural gas in 2010, while consuming 321 Bcf. About 57 percent of the country’s total gross natural gas production of 1,124 Bcf was reinjected to aid in enhanced oil recovery. In 2007, natural gas production began to exceed consumption, allowing for exports.

Chevron is the largest natural gas producer in the country, producing on average 642 Mcf gross natural gas daily and supplying about 65 percent of the country’s needs. In partnership with Ecopetrol, the company operates the offshore-Caribbean Chuchupa field in the Guajira basin, the largest non-associated natural gas field in the country.  The company also operates the nearby onshore Ballena and Riohacha fields. The two biggest natural gas fields in the country, the Cupiaga and Cusiana fields in the Llanos basin, in central Colombia, were acquired from BP by Ecopetrol and Talisman Energy in 2010.  Almost all of the gas produced from these fields is re-injected. 

The Colombian government published a decree in March 2011 outlining a plan to increase domestic natural gas production, including production from unconventional gas fields.  Policies aimed at increasing domestic natural gas consumption and exports, combined with increased demand from the power sector due to weather-related hydroelectricity shortages, have made expanding natural gas production a priority for the government.

There are some 2,000 miles of natural gas pipelines in Colombia. Empresa Colombiana de Gas (Ecogás) operates most of Colombia’s natural gas pipeline network.  The three main lines include the Ballena-Barrancabermeja, linking Chevron's Ballena field on the northeast coast to Barrancabermeja in central Colombia; the Barrancabermeja-Nevia-Bogota line, which integrates the Colombian capital into the transmission network, and the Mariquita-Cali line through the western Andean foothills.

In early 2008, the Trans-Caribbean Gas Pipeline, also known as the Antonio Ricaurte pipeline, came online, linking the Ballena field in northeastern Colombia with western Venezuela. Venezuela’s PDVSA spent $467 million to finance the pipeline. In November 2011, the presidents of both countries signed an agreement to extend the Ricaute pipeline across Columbia to Panama and Ecuador. While initial contracted volumes for export from Colombia ranged from 80-150 million cubic feet per day (MMcf/d), actual exports to Venezuela have often exceeded these levels due to rising demand in Venezuela for natural gas for power generation and re-injection. In December 2011, Chevron and Ecopetrol’s export agreement with Veneuela’s PDVSA was extended at a level of 150 MMcf/d. 

Coal bed methane (CBM) is a gaseous hydrocarbon that occurs along with coal reserves. This unconventional source of natural gas is transported and used in the same way as conventional natural gas. Drummond has stated that its Colombian mines could contain up to 2.2 Tcf of CBM, and the company has signed contracts with Ecopetrol to extract CBM from both the La Loma and El Descanso mines. CBM has the potential to dramatically increase Colombia’s proven natural gas reserves, facilitate greater domestic production, and potentially allow additional exports to neighboring countries.

Colombia produced 82 million short tons (MMst) of coal in 2010, while only consuming 5.6 MMst. According to the Ministry of Mines, the country’s coal production rose to 94.6 MMst in 2011. Colombian coal production is exclusively carried out by private companies and has doubled since 2000.  The country’s 2010 production set a record for national production, and the government aspires to double it by 2019.

The largest coal producer in Colombia is the Carbones del Cerrejon consortium, composed of Anglo-American, BHP Billiton, and Xstrata. The consortium operates the Cerrejon Zona Norte (CZN) project, the largest coal mine in Latin America and the largest open-pit coal mine in the world. CZN is an integrated system of mine, railroad, and a Caribbean coast export terminal, and accounted for 38 percent of Colombia’s production in 2011, or about 31 MMst. 
US-based Drummond Company operates the second-largest coal mining operation in Colombia, La Loma, which is also an integrated mine-railway-port project, producing about 27 MMst in 2011, or 33 percent. In June 2011, Drummond entered into an 80-20 percent partnership with Japan’s Itochu Corp., known as Drummond International, which now owns and operates its Colombia interests. Itochu’s initial investment of $1.5 billion will enable expansion of the project with the construction of a new export facility and the increase of export capacity to 40-45 MMst per year. The partnership is aiming to increase coal exports to Japan and other Asian countries.

Colombia exported 76.4 MMst in 2010, mainly to Europe, other South American countries, and the United States.  Coal exports are an important part of the Colombian economy. Coal is the country’s second-largest export after oil and represented 15 percent of export earnings in 2010.  The United States and Colombia have a major trading relationship in this sector and in 2010 Colombian coal represented 75 percent of U.S. coal imports, or 14.6 MMst.  In 2011, the United States imported 9.5 MMst, or 73 percent, as U.S. coal imports declined.

Colombia recently began exporting sizable quantities of coal to Asian markets, especially China.  According to Global Trade Information Services, Asia’s share of Colombian coal exports grew from less than one percent in 2009 to 12.7 percent in 2010.  A combination of higher prices in Asia, lower freight costs, and falling exports to the United States spurred this expansion into Asian markets. In May 2012, talks were held in Beijing between the presidents of China and Colombia regarding China’s interest in investing in Colombia’s coal sector and the construction of a railroad to the Pacific coast to facilitate exports to Asia. Both the expansion of the Panama Canal (currently slated for completion by 2015) and Chinese-backed transportation infrastructure projects could generate greater exports of Colombian coal to Asia in the future.