Register for free to join our community of investors and share your ideas. You will also get access to streaming quotes, interactive charts, trades, portfolio, live options flow and more tools.
Register for free to join our community of investors and share your ideas. You will also get access to streaming quotes, interactive charts, trades, portfolio, live options flow and more tools.
Ecopetrol is undertaking maintenance and upgrade work at its Barrancabermeja refinery as it seeks to implement new technology and reinforce fuel supply.
In 2022, the national oil firm announced that it would invest 3.2tn pesos (US$770mn) by 2025 to modernize and expand the refinery. The company said the funds would be directed to circular water management, fuel quality improvement, renewable energy, green and blue hydrogen development and carbon capture initiatives.
In 2024, Ecopetrol plans to begin the construction of two industrial-scale hydrogen projects, each with an electrolysis capacity of 60MW. The facilities are expected to produce a combined 18,000t/y of green hydrogen by late 2025 or early 2026. In the long term, the firm aims to produce 1Mt of clean fuel per year to serve domestic and international markets.
In addition, Ecopetrol's midstream arm, Cenit, is conducting studies into using its pipelines to transport hydrogen.
Other companies that have shown interest in developing hydrogen projects in Colombia include TGI, Promigas, Hevolución, TotalEren, EDF and Siemens.
Colombia's President Petro has high hopes for the oil-rich country's green transition, following up on climate pledges made during his 2022 electoral campaign. Petro made his stance clear at COP28, suggesting that he hopes to make Colombia one of the few oil majors to rapidly shift away from fossil fuels to renewable alternatives. Nevertheless, Colombia's oil industry is continuing to expand, with several projects planned for the mid-term. In addition, following the incongruent actions of Brazil's President Lula when it comes to climate pledges and the country's oil and gas industry, many wonder whether Petro will be able to stick to his climate pledges while also stimulating economic growth for the South American country.
Colombia has not yet halted oil and gas production and has several projects currently in the works. Last November, Colombia's state-run oil company Ecopetrol and Brazilian partner Petrobras started drilling their Orca Norte 1 offshore appraisal well in the Tayrona block. The two firms hope to transport gas to the mainland via a new pipeline that would also run to the Chuchupa gas field. Ecopetrol is also working with Shell to develop their Gorgon discovery in the ultra-deepwater COL-5 block.
Onshore, Geopark and Hocol are developing Llanos 123, which is one of five exploration blocks the pair were awarded in a 2019 licensing round. Following two successful discoveries, the duo are hopeful for more over the next year. Meanwhile, the independent Canadian gas producer Canacol plans to drill the Pola-1 exploration well on the VMM-45 block in the first half of 2024, following three recent discoveries.
At COP28, Petro also announced the launch of a major national climate policy, aiming to provide $32 billion -equivalent to around 2.5 percent of the country's GDP - to projects in green transportation, clean energy, and climate adaptation. Unlike many of his Latin American counterparts, such as AMLO in Mexico and Madero in Venezuela, Petro does not see long-term oil and production as key to economic prosperity. And some think Petro could be among a new generation of leaders that put greater importance on the environment and the potential impact of climate change.
To do so, however, the companies must grapple with Colombia's cumbersome bureaucracy and regulatory bottlenecks.
"Developing linear infrastructure in Colombia is a slow, impactful and expensive process," Ramírez said.
According to national industry association Hidrógeno Colombia, further studies must be carried out to determine the optimal blend of hydrogen with natural gas for Colombia's pipelines.
Colombian oil pipeline operator Cenit could use its existing infrastructure to transport clean hydrogen amid broader efforts to diversify its business model.
Vidal Ramírez, Cenit's head of operational planning, told BNamericas that the company is seeking ways to utilize its pipeline and polyduct network to transport hydrogen to Colombia's main consumer markets.
"We're currently carrying out specific studies on this possibility," Ramírez said in a telephone interview. "We have a competitive and important advantage: we have 6,650km of pipelines and 54 plants scattered throughout the country."
"Based on this, with the help of national and international experts, we’re reviewing the feasibility of being able to use this infrastructure for the transportation of other energy sources."
Cenit is not the only Colombian company looking to use existing pipelines to transport hydrogen blends.
Bucking the trend was the industrial sector (up 2BBTU/d to 270BBTU/d), households (up 2BBTU/d to 177BBTU/d) and retailers (up 1BBTU/d to 59BBTU/d). Demand from natural gas vehicles remained steady at 55BBTU/d.
Colombian natural gas demand fell in November as higher rainfall reduced consumption by thermoelectric generators, new figures show.
Demand for deliveries via the SNT national pipeline network dipped to 974BBTU/d (billion British thermal units a day) from 1,101BBTU/d in October, according to data from gas market operator BMC.
The thermoelectric segment consumed 242BBTU/d, down from 373BBTU/d in October, while refineries and petrochemical plants also saw slight decreases in gas use to 142BBTU/d and 21BBTU/d, respectively.
“This is an intense debate in Colombia. It does not mean that we will be left without oil or coal, since there is already coal, oil and gas in exploitation, and there are already many previously signed exploration contracts that remain in force."
Oil and gas industry groups have repeatedly warned Petro that his decision threatens Colombia's energy security while limiting its most important source of export revenue.
Guillermo Acosta, the CEO of oil engineers' association Acipet, told BNamericas earlier this year that he was confident the government would change its mind based on "technical data and expert information".
Apart from ruling out the possibility of signing new exploration contracts, the government said its energy investment strategy was now focused on renewable sources, with a particular focus on offshore wind and hydrogen.
The document also highlights the declaration of an urgent power transmission project, without providing details.
Other items include petrodiesel tax breaks and requirements for access to co-financing of natural gas infrastructure projects.
Gas pipeline projects, clean energy tax breaks and power grid expansion works are among the leading items on the Colombian energy ministry's 2024 regulatory agenda.
Ministry planning unit UPME has released a 21-point draft plan for public comment ahead of the agenda's final publication on December 28.
One of the most pressing items will be the identification of priority projects to be "executed in the first instance" as part of the government's IPAT gas transport expansion program.
Another is a discussion about tax breaks for renewable energy, hydrogen, carbon capture and energy efficiency initiatives.
NG Energy has signed three long-term natural gas supply contracts as it ramps up production at its Maria Conchita block in northern Colombia.
Vanti, Gases del Caribe and Gases del Occidente each agreed to three-year contracts under the take-or-pay modality, NG Energy said in a statement.
The Canadian firm also revealed it began selling natural gas from Maria Conchita at prices ranging from US$7.70/Mf3 (per million cubic feet) to US$8.20/Mf3.
Colombia’s state-run energy company Ecopetrol today announced it has become a signatory to Aiming for Zero, an initiative launched by the Oil and Gas Climate Initiative (OGCI) to encourage the oil and gas industry to cut methane emissions to near zero.
Colombia’s biggest oil producer and Latin America’s fourth largest oil company becomes the second company in the region and joins around 100 companies that have pledged to do everything possible to achieve near zero methane emissions from operated oil and gas assets by 2030.
Reducing methane emissions from oil and gas is critically important to meet the objectives of the Paris Climate Agreement and is a top priority for OGCI, which launched the initiative last year. It is also an essential objective of the Oil & Gas Decarbonization Charter, launched this week at COP28 in Dubai.
Report this ad
Learn more aboutRefinitiv
Reuters home
My View
Following
Saved
Commodities
Colombia's Ecopetrol to invest up to $6.7 billion in 2024
Reuters
December 1, 20236:43 AM ESTUpdated 4 days ago
The logo of Ecopetrol is pictured at its headquarters in Bogota
The logo of Ecopetrol is pictured at its headquarters in Bogota, Colombia July 11, 2023. REUTERS/Luisa Gonzalez/File Photo Acquire Licensing Rights
BOGOTA, Nov 30 (Reuters) - Colombia's state-run oil company Ecopetrol (ECO.CN) will invest between $5.7 billion and $6.7 billion and produce up to 730,000 barrels per day equivalent (boepd) in 2024, it said in a statement.
A majority of that spending, about $4.8 billion, will go toward keeping production between 725,000 and 730,000 boepd, the company's refineries at between 420,000 and 430,000 barrels per day (bpd) and transporting more than a million bpd, the company said late on Thursday.
The plan includes 360 development wells and 15 exploratory ones, operations vice-president Alberto Consuegra said in a video.
About 42% of the spending plan will be focused on the energy transition, including low emissions, decarbonization, electrical transmission and natural gas supplies, the statement added.
Ecopetrol, Colombia's largest company, plans to generate some 7 trillion pesos in efficiencies during the next three years, it said.
The top union for Ecopetrol workers, USO, warned in October the company was considering cutting back some $2 billion in investment next year, but the 2024 figures are broadly in line with 2023 investment of between $6.3 billion to $7.4 billion.
NATURAL GAS
In the near-term, Ecopetrol will continue to consider oil and gas as its core business, according to Roa.
Gas will play a particularly important role amid fears Colombia faces a supply shortage of the fossil fuel as soon as next year.
"Our estimations show that the natural gas deficit next year will reach 37BBTU/d (billion British thermal units a day), rising to 131BBTU/d by 2025," Roa said.
Ecopetrol hopes to boost gas supply via exploration and production projects off Colombia's Caribbean coast. In addition, the firm is pushing ahead with plans to reactivate a pipeline that would allow it to import gas from Venezuela via an alliance with PDVSA.
In a statement published last week, Ecopetrol said it was seeking permission from the US to participate in Venezuelan oil and gas production projects without breaching sanctions. The company also said it was carrying out work to reactivate a disused binational pipeline that would allow for gas imports from the neighboring country.
"Now we just need to guarantee the supply conditions, the quality of the gas and [determine] the price that is fixed in the contract," Roa said.
CLEAN HYDROGEN, RENEWABLES
At the forefront of the new business model is a focus on clean hydrogen. By 2040, Ecopetrol hopes to produce 1Mt/d of green hydrogen to meet domestic demand as well as export to markets in Europe and Asia.
"Ecopetrol currently consumes around 130,000t/y of grey and blue hydrogen," Roa said. "Our first challenge is to meet demand from our own refineries and then look at exporting it."
The company is also aiming to become a major generator of non-conventional renewable energy, which would provide the key raw material for green hydrogen production.
According to Roa, the installed capacity target from renewable sources is 1,900MW by 2030 and up to 4GW by 2040.
One stumbling block, however, is Ecopetrol's preclusion from generating electricity on a commercial scale because of its controlling stake in power transmission company Isa.
The government is seeking to push through a bill that would overturn the existing law, which is designed to prevent companies from holding dominant positions throughout the electric power value chain.
"We are currently evaluating a portfolio of projects at different levels of progress totaling 1,600MW," Roa said. "We'll make decisions about them little by little."
Colombian state-run company Ecopetrol has outlined plans to allocate more than 40% of its 2024 investment budget to clean energy as it accelerates decarbonization plans.
By 2030, the Bogotá-based firm expects its traditional oil and gas business to account for less 60% of Ebitda, with the remainder to come from low or zero-carbon initiatives.
"We are going to plan for the coming year with some very important investments, for which 58% will be dedicated to the traditional business and 42% to projects related to the energy transition," CEO Ricardo Roa said in a video presentation.
Gas prices on the primary market in the firm, interruptible and CF95 categories – which together comprise more than 68% of total contracts – ranged from US$4.50/MMBTU (million British thermal units) and US$5.23/MMBTU. This compared to US$4.48/MMBTU to US$4.71/MMBTU in October 2022.
The number of contracts negotiated on the secondary market fell to 453 from 503 a year earlier, according to BMC.
Secondary market prices, meanwhile, for October delivery in the "conditional firm" segment averaged US$6.72/MMBTU, up from US$6.01MMBTU in the corresponding month last year. Prices in the "emergency" category averaged US$7.93/MMBTU.
Colombian natural gas demand rose by a third year on year in October, spurred by surging consumption from thermoelectric generators, new figures show.
Demand for the fossil fuel delivered via the SNT national pipeline network reached 1,101BBTU/d (billion British thermal units a day) compared to 830BBTU/d in October 2022, according to data from gas market operator BMC.
The thermoelectric segment consumed 373BBTU/d, up from 136BBTU/d a year earlier, while the industrial sector used 268BBTU/d, up from 248BBTU/d.
The Fossil Fuel Treaty is already supported by a bloc of 8 Pacific, Caribbean and South Asian countries, as well as by the World Health Organisation, the European Parliament and nearly 100 cities and sub-national governments. Therefore, at COP 28, where all attention will be focused on the exit of fossil fuels, Colombia will have the opportunity to be recognised as part of a group of pioneering nations that promote a diplomacy of international cooperation based on equity to address the root cause of the climate crisis.”
Due to both the physical realities of our planet and emerging global economic energy trends, Colombia is forging the way forward. Decision-makers, businesses and other key players who will be present at COP28 have both the responsibility and the interest to follow that same path.”
Just two weeks before COP28 in Dubai, which will focus on phasing-out fossil fuel production, more than 100 scientific and civil society leaders – including Bill McKibben, Julia Steinberger, Naomi Klein, Dr Mabel Bianco, Kate Raworth, Ayisha Siddiqa, ReV James Bhagwan – signed an open letter calling on Colombia to confirm its climate leadership by adopting two concrete measures:
Banning fracking and unconventional extraction
Supporting the call for a Fossil Fuels Treaty
International oil majors are pushing to expand production at natural gas projects off Colombia’s Caribbean coast, Ecopetrol SA Chief Executive Officer Ricardo Roa said in an interview.
The oil and gas industry in the country is not going to come to an end," Roa said, adding funds from fossil fuels would be key to financing the transition to renewable energy.
BOGOTÁ—In a giant parking lot on the outskirts of Colombia’s capital, national oil company Ecopetrol is running an experiment.
The over 400,000-square-foot expanse is where Bogotá keeps part of its municipal bus fleet. Hundreds of those vehicles are electric and are powered up regularly with battery chargers. But one bus is fed instead by green hydrogen, a fuel created on-site. Green hydrogen is made with renewable energy and is carbon-free to burn, though using it in buses is expensive with current technology. Government funds helped Ecopetrol partner with Colombian auto parts firms to build the turquoise bus, which will soon be the first of its kind to carry passengers through the capital city.
The bus is one of at least 28 low-emission hydrogen projects under development in Colombia. For the country, whose top export in 2022 was oil, hydrogen could become a greener source of fuel—and revenue. The Colombian Mines and Energy Ministry has projected that low-emissions hydrogen exports could in future decades bring in $5 billion annually—over a quarter of the amount oil exports earned last year.
Colombia’s research and development funding for clean hydrogen is an example of industrial policy—a type of government intervention that aims to grow specific activities within the economy. Industrial policy has gained increasing global attention in recent years as China and the United States have rolled out hundreds of billions of dollars in subsidies and other government benefits for low-carbon business. Other rich countries—from those in Europe to Canada to Australia—are now scrambling to keep up. For developing nations like Colombia, the question is how to do the same when they have relatively little money available to spend up front.
The bus is one of at least 28 low-emission hydrogen projects under development in Colombia. For the country, whose top export in 2022 was oil, hydrogen could become a greener source of fuel—and revenue. The Colombian Mines and Energy Ministry has projected that low-emissions hydrogen exports could in future decades bring in $5 billion annually—over a quarter of the amount oil exports earned last year.
A key factor to the bus’s development was that “the national government is directly involved, not just with the creation of public policies but with financial support for this project,” said Yeimy Báez, a former Ecopetrol vice president then overseeing low-emissions projects, as she surveyed the lot under the blistering Andean sun in July. While the fuel for the prototype bus was created using electricity from hydropower, the premises will soon be equipped with solar panels to create hydrogen bus fuel. Baez noted that hydrogen projects had turned several former Ecopetrol oil and gas engineers into “workers of the energy transition.”
BOGOTÁ—In a giant parking lot on the outskirts of Colombia’s capital, national oil company Ecopetrol is running an experiment.
The over 400,000-square-foot expanse is where Bogotá keeps part of its municipal bus fleet. Hundreds of those vehicles are electric and are powered up regularly with battery chargers. But one bus is fed instead by green hydrogen, a fuel created on-site. Green hydrogen is made with renewable energy and is carbon-free to burn, though using it in buses is expensive with current technology. Government funds helped Ecopetrol partner with Colombian auto parts firms to build the turquoise bus, which will soon be the first of its kind to carry passengers through the capital city.
Empresas Públicas de Medellín (EPM) has outlined plans to increase spending by around 20% next year as it prioritizes its flagship Hidroituango project and decarbonization initiatives.
The multi-utility's board approved a budget of 28.8tn pesos (US$7bn) in 2024, up from 24.2tn pesos this year, of which the majority will go to its core businesses of power generation, transmission, electricity distribution, gas, water supply and wastewater.
Colombia – Andi and Naturgas launched the first hydrogen corridor with nine organizations.
The National Association of Businessmen of Colombia, Andi, and the Colombian Natural Gas Association, Naturgas , within the framework of the First Hydrogen and Energy Efficiency Congress of the country, at the Cartagena de Indias Convention Center, launched the first hydrogen corridor green in Colombia, with the saying ‘driving towards sustainability’.
Once production fully ramps up, NG Energy will be supplying about 6% of the Andean nation’s demand for natural gas. Fonseca said the company hopes it can raise that level to as much as 20% within three to five years as pipeline infrastructure is developed to get gas to market.
The company unveiled its production forecasts Thursday as Colombia looks to reverse declining gas reserves, which at an estimated 7.2 years are at their lowest since at least 2007. President Gustavo Petro has stopped awarding new oil and natural gas exploration licenses as part of a pledge to wean the nation off of its dependency on fossil fuels.
Companies are focusing their efforts on existing contracts as a result. State-owned Ecopetrol SA, the largest natural gas producer in the country, is looking to expand output off the Caribbean coast, its top executive said earlier this month.
NG Energy International Corp. expects an eight-fold boost in its natural gas production in Colombia after a new field begins production next year.
No idea but, that’s my hope.
Among other proposals, ANH has proposed that holders of licenses for unconventional oil and gas deposits may convert their contracts to allow conventional exploration in the same areas.
In addition, unconventional block holders would be free to use the acreage to develop renewable power projects or carbon capture, utilization and storage (CCUS) initiatives.
ANH says the measures will boost the chances of success for existing contract holders and allow the country to reinforce its energy security through the incorporation of new reserves.
Colombian oil and gas regulator ANH is close to publishing new rules that will ease requirements for companies with exploration and production contracts.
In a draft resolution released for public comment in May, ANH proposed a 50% extension to drilling timetables in the first phase of exploration and 100% in the second.
It also opened the possibility for operators affected by force majeure to request changes to the physical boundaries of their licenses.
“The ANH has worked in recent months to fine tune an agreement after reviewing comments from the industry," the agency’s president Clara Guatame said during an energy event in Bogotá.
Colombia currently has 12 active exploration contracts in three offshore basins off the country's northern Caribbean coast. State-run oil company Ecopetrol has stakes in all but one of the blocks, which are expected to require investments of US$280mn this year.
The areas are considered vital to Colombia's efforts to guarantee future natural gas supply amid an accelerating decline of proven reserves.
The oil and gas industry in the country is not going to come to an end," Roa said, adding funds from fossil fuels would be key to financing the transition to renewable energy.
Last December, Ecopetrol said it would invest between 25.3 trillion pesos and 29.8 trillion pesos (between $6 billion and $7.1 billion), with a focus on the transition to renewables and ensuring energy self-sufficiency.
Colombia's oil and gas industry is not coming to an end due to the transition to cleaner energy, Ecopetrol CEO Ricardo Roa said on Tuesday, i
The rate at which consumption of natural gas is growing in Colombia, coupled with declining domestic production, which will accelerate due to Petro's ban on hydrocarbon exploration, will cause imports of the fuel to accelerate. This is placing greater pressure on Bogota to significantly increase the volume of LPG cargo being received by Colombia, threatening the balance of trade and energy security. It is predicted that the once energy-self-sufficient country will become a net importer of natural gas by 2030. Even recent natural gas discoveries will do little to expand domestic supply and alleviate the threat of an energy crisis while exacerbating existing economic weakness caused by a ballooning trade deficit.