Low exploration results and a tougher regulatory framework have quickly undermined hopes that Colombia’s Caribbean coast could be an energy hub for the region: now foreign oil and gas firms are scaling back plans or just pulling out altogether.
Colombia is already seeing the impacts of this shift on its energy balance, with the risk of putting a deeper trade deficit and stronger dependency on imports.
Colombia offshore and onshore blocks used to be viewed as a promising frontier, but have yielded lacklustre returns.
According to Reuters, individual players are also retreating from fracking in Colombia, combined with virulent policy changes under the administration of President Gustavo Petro, a ban on fracking and a high environmental hurdle on exploration.
Colombia’s oil and gas sector has lost major global players, with only a little remaining with the likes of Shell, Chevron, Exxon Mobil, ConocoPhillips, and Spain’s Repsol walking away or greatly reducing their footprint.
Most recently, Chevron had its final offshore block removed from the country’s active exploration list, reducing its presence to retail fuel operations.
When Shell departed in April, it said that it was due to a strategic realignment, but the broader trend is capital reallocation away from Colombia.
Others, such as Occidental Petroleum, have switched their focus to neighbouring Peru, where terms for exploration and production have improved and possibilities appear more favourable.
A shrinking presence
The withdrawals reflect rising disenchantment among Colombia’s energy businesses. Welligence, a US energy consultancy, noted a paucity of substantial discoveries in recent years, implying that firms are just looking for better prospects elsewhere.
“It’s a clear reality that there haven’t been significant findings in Colombia in a long time,” Andres Armijos, head of Latin America Research at Welligence, said to Reuters.
Colombia’s energy authority has disputed this narrative. The agency’s chief, Orlando Velandia, stated that the exits were motivated by a corporate diversification strategy rather than distrust in Colombia.
However, the migration toward countries like Peru, Trinidad & Tobago, Guyana, and Suriname, where major finds and more favourable policies are attracting billions of dollars in investment, suggests otherwise.
Delays and disappointment
Even though such exciting finds may be promising, they are still subject to serious delays.
While the most considerable natural gas concentrate identified in the country so far has been the Sirius project featured off the coast and shared by Petrobras from Brazil and Ecopetrol, a state-run company.
The project is estimated to have more than 6 trillion cubic feet of gas and may extend the life of gas production in Colombia for more than a decade.
However, the companies have to work on the project’s delays due to red tape. At least one hundred consultations of communities along the construction area and two environmental licenses, meaningful concerns about the construction of pipelines and processing plants in a few years, which can be an aggravating factor.
Ecopetrol is still assuring the public that it will start the gas production by 2029 or at the latest by 2030.
However, Felipe Calderon from Welligence stated that such a position of the company is unrealistic, considering how many papers and permits should be obtained.
At the same time, smaller finds of Shell at Gorgon’s field did not launch the company into serious positions in the country, and the ambitious ultra-deepwater well of Occidental in Komodo found itself under appeal in the rights of the drilling permit.
Ecopetrol also drilled the year-round Orca gas project is yet to find its fate, and development plans have not been announced.
Economic risks mount
The drop in foreign investment is already hurting Colombia’s energy balance. In May, oil output declined by 4.8% year on year to 749,800 barrels per day, far lower than the 1 million barrels per day achieved a decade ago.
Gas output fell by roughly 19% during the same time period.
Industry leaders warn that the country isn’t replacing its depleted supplies rapidly enough.
Under present contracts, just 14 additional wells are anticipated to be drilled each year until 2030, which is well short of what is required to maintain production.
Luis Carlos Sarmiento, chairman of Grupo Aval, stated that insufficient exploration and permitting delays risk leaving gas discoveries stranded.
“We are running out of gas reserves,” he warned during a recent conference in Bogotá.
The consequences extend beyond energy. A rising reliance on imported fuel might increase Colombia’s trade deficit by billions of dollars every year.
According to the Colombian Petroleum Association (ACP), over 1,500 protests disrupted oil production last year, deferring 4 million barrels of output and costing 3,000 jobs.
A political crossroads
President Petro’s energy plan promotes a shift away from fossil fuels and toward renewables. He has rejected new exploration contract rounds and has spoken out against coal, oil, and gas development, declaring, “The last oil reserves will run out, because that kills Colombia and humanity.”
The private sector remains cautious. With no immediate plan to close the investment gap and exploration stagnant, Colombia faces having to import both crude oil and gas, resulting in an energy trade deficit with long-term economic implications.
Some political opponents have already promised to resurrect the sector if they win the 2026 presidential election.
Until then, Colombia’s oil and gas sector appears to be stalled, stuck between global market realities and a domestic policy move that has dampened international interest.
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