Ecopetrol’s New CEO Seeks to Boost Oil Output Amid Petro Restrictions

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(Bloomberg, 25.Apr.2023) — Ecopetrol SA will invest in technology to boost output at oil fields it operates as the Colombian government sticks to a pledge to ban new drilling contracts, according to the company’s new Chief Executive Officer Ricardo Roa.

Colombia’s state-controlled oil producer has some 85 exploration contracts of which only around 8% have been successful, Roa said Tuesday in an interview with Blu Radio.

“From the environmental point of view, what is responsible is to no longer allow for the search of more fossil fuels,” Roa said. “With the existing contracts we have today, we have to be more successful in the exploration and discovery of oil and gas reserves to guarantee our energy security.”

President Gustavo Petro was elected last year, pledging to phase out oil and coal, which account for about half of exports. So far his administration has refused to issue any new exploration licenses, leaving drillers with few options other than to try to better exploit the concessions they already have.

Ecopetrol will look to increase Colombia’s reserves of oil and gas which currently stand at the equivalent of around 8.7 years, according to Roa, who previously headed power company Grupo Energia Bogota.

Venezuela Gas

Should gas reserves start to dwindle, imports from Venezuela would be an option, he said. He added that pipeline operators such as Promigas SA and Grupo Energia Bogota’s unit TGI should be studying the unused gas pipeline that runs between Colombia and Venezuela, to see its current state of repair.

“That’s an asset that provides reliability in supply” of gas for Colombia, Roa said.

With oil accounting for about 15% of Colombia’s fiscal revenue and 30% of foreign direct investment, Petro’s plans have weighed on Colombian assets. Ecopetrol’s stock has dropped 17% since Petro’s victory in June and extended losses on Tuesday, with shares falling as much as 4% in Bogota trading.

Recovery Factor

After taking on his new role on Monday, Roa held a press conference where he told reporters that Ecopetrol will target an increase of two percentage points in its oil recovery factor, or the amount of crude that can be extracted from a reservoir. The factor is currently 18% to 20%, he said, without elaborating on what the technology will be.

The Petro administration, which took over in August, is also seeking to implement a ban on hydraulic fracking. Congress is currently discussing a bill that would halt the controversial method of oil extraction, which the previous government hoped would attract new investment and lift production. As a result, Ecopetrol scrapped two such pilot projects in Colombia last year.

When asked about the Permian Basin joint venture with Occidental Petroleum Corp. in Texas, Roa said it was “very profitable.” If you get rid of one profitable asset, you would need to find something that is equally profitable, he said.

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By Andrea Jaramillo

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