“There may be higher growth problems, but something that was previously exaggerated like a price of 100, would now be possible,” explained former minister Juan Carlos Echeverry and former president of Ecopetrol Juan Carlos Echeverry.
In statements to Caracol radio, Echeverry indicated that “international markets move to the rhythm of Wall Street; if the price of oil rises, it causes many to hold it for when it has a good price.”.
According to the former minister, it seems that the price is going up; however, in the short term, in his opinion, an increase in production is not viable because it is difficult for many companies that did not invest enough.
“There was a reduction in costs that causes more profit to be extracted from each barrel; several companies, including Ecopetrol, work in mature fields, for example in Putumayo.”.
Oil Exploration
Echeverry said that peace brought enormous possibilities for exploration, and the Government knows this; Colombia's export data comes from oil and coal.
“That is why they are working in departments where it was impossible to think of projects.”.
Similarly, he declared about the situation in Venezuela and PDVSA. He said there is enormous secrecy, but the figures reveal the situation, and one of the largest oil producers in the world is in trouble.
“Ecopetrol is a profitable company that has no other in the country; it has potential reserves, and a cost reduction process translates into significant investment.”.
Within this year's fiscal framework, the government is now working with better expectations for the price of oil for this year at US$67 per barrel compared to US$55, prices that were expected at the end of the year.
The Ministry also made a marginal increase in oil production forecasts from 840,000 barrels per day to 844,000. These revisions mean about US$1.6 billion in additional revenue, mostly coming from the price revision.
Oil Outlook
According to Asobancaria, the best growth prospects for the economy are supported by a context of rising oil prices, anchoring of inflation expectations, and a decrease in electoral uncertainty, elements that have modified the economic landscape and narrowed the perception of risks. Indeed, within the current risk balance, concerns about private consumption behavior, business climate, and fiscal stability have been easing. However, doubts associated with the recovery of the construction sector, external risks related to the normalization of the FED's monetary policy, and potential volatility in crude prices in global markets continue to be elements that could detract from the recovery path.
On the other hand, in its quarterly report, the Colombian Petroleum Association (ACP) stated that with signs of a slight recovery, the first quarter of the year began for the hydrocarbons sector.
Oil Production
From January to March, there was an improvement in figures related to exploration and production activity of hydrocarbons and the distribution and sale of fuels. In terms of crude production, the first quarter recorded a level of 847,000 barrels per day, representing a slight increase of 1 percent compared to the same period last year.
The industry's estimate is that by the end of 2018, production will be at 860,000 barrels per day, particularly considering that better investment budgets are expected this year for both onshore exploration and investment.
Regarding gas production, there was a recovery of 3 percent compared to the same quarter last year; however, the country is still far from reaching the levels of 2015 and 2016. The report also indicates a 12 percent increase in oil and derivative exports, which aligns with a rise in prices in the first three months of the year. Regarding exploration, the ACP report shows mixed figures.
On one hand, the number of explored wells reveals a reduction compared to the first quarter of 2017, when 18 wells were drilled, compared to the 15 wells drilled in the same period of 2018. However, in terms of seismic activity, the number of kilometers executed tripled in the first quarter, with a record of 700 equivalent kilometers, all onshore. This year could end with an execution of 3,000 equivalent kilometers.
“This year we are seeing greater dynamics in exploration and production activity in Colombia. While the improvement in prices favors the fulfillment of the investment budgets planned for this year, this cannot be a signal to rest on our laurels; we must continue working to improve the competitiveness of the sector, which is a fundamental source of resources for the economic and territorial development of Colombia,” commented the executive president of the ACP, Francisco José Lloreda Mera.
Colombian Association of Oil and Gas