Oil has been present in our history since before the conquest. It was the Yariguíes tribes, in the department of Santander, who began to use it as an ointment to cure muscle ailments; later, the Spaniards used it as a waterproofing agent for boats and, subsequently, to light the first lamps.
But it was only at the beginning of the 20th century, with the start of the oil industry in Colombia, that this resource gave the country the opportunity to modernize with the development of road infrastructure and industry, as well as the mechanization of agriculture. Furthermore, the oil sector provided an unprecedented boost to the economy and positioned itself as one of the most important for the country.
The history of oil in Colombia is fascinating. It began with the first records of natural springs by indigenous tribes and evolved with major discoveries, such as the one that marked the beginning of this in the country, in 1917, with the Infantas field by the Tropical Oil Company, later Exxon of Colombia.
Over these hundred years, the oil sector guided the country towards modernization. For example, it greenlit the development of the automotive and aviation industries in Colombia, allowing millions of people today to commute to work, children to schools, the sick to hospitals, and thousands to travel by air to different destinations.
Thus, oil is part of our lives. In mobility, of course, but also in medicines, fertilizers, paints, underwear or sportswear, cell devices, and contact lenses, for example. Vehicles –whether gasoline or electric– and airplanes are mainly made of plastic: less weight, friction, and fuel consumption.
It has been a hundred years, a century of great contributions to the country, in which the creation of Ecopetrol in 1951 was fundamental to manage the hydrocarbon resources that until then belonged to the Tropical Oil Company. Over the years, Ecopetrol would become the main oil company in the country and one of the most important in Latin America.
As an ally of Colombia's development, the private sector has always been present, initially alone and later alongside Ecopetrol, whether through partnership contracts or agreements between companies. This formula, based on the unification of knowledge and capital, allowed for the discovery and/or development of the most important fields: Cira Infantas, Caño Limón, Chuchupa-Ballenas, Cusiana-Cupiagua, and Rubiales.
The hydrocarbon industry represents 7% of the national GDP and drives other sectors. Each oil or gas project requires infrastructure, contracting goods and services such as transportation, food, clothing, and technical services, which generates a gigantic productive chain that boosts local economies.
For every 100 pesos that enter a project, between 60 and 70 pesos are allocated to the Colombian state through taxes, dividends from Ecopetrol, contractual rights, and royalties. All of this reflects that this is a fundamental sector for the fiscal and macroeconomic stability of the country, the generation of investment resources, and regional development.
[prefix_blockquote cite=»Francisco José Lloreda Mera» align=»right» pull=»yes» italic=»yes»]there is oil and gas waiting for a country's decision to want to develop them.[/prefix_blockquote]
In addition to the above, there are social and environmental investments, both mandatory and voluntary, made by companies in the sector. These projects, coordinated and agreed upon with communities and governments at all levels, bring well-being to Colombians and protection to the country's biodiversity and water sources.
Opportunities and challenges
Having completed one hundred years of the industry, Colombia has the opportunity to turn the wealth of its subsoil into progress on the surface, in a scenario of increasing global energy demand and a diversified supply, thanks to renewable sources. That is to say, to responsibly extract its oil and gas over the next few decades.
The industry not only provides the country with investment resources but also energy security, including the supply of liquid fuels, without which Colombia could not move. Thanks to its refining, transportation, storage, and distribution capabilities, the country progresses daily.
But the hydrocarbons sector, crucial for the country, is at a turning point. While proven crude oil reserves have decreased, there is interesting materiality in mature fields and new frontiers, offshore and in unconventional resources. That is to say, there is oil and gas waiting for a country's decision to want to develop them.
The hydrocarbons sector could contribute around 100 trillion pesos in revenue to Colombia over the next four years. To achieve this, reserves must be increased by 2 billion barrels to maintain a minimum production of 860,000 barrels/day, which in turn requires around USD 7 billion in sustained annual investment.
Attracting that investment depends on priority decisions and measures: a more competitive tax regime, allocation of new areas, reforming the distribution of royalties, reducing operational costs, achieving greater legal stability, and working towards a free and competitive liquid fuels market that meets the country's needs.
It is possible to responsibly harness various energy sources, including non-renewable natural resources, and turn them into progress. This is what the hydrocarbons industry has done for one hundred years, with successes and failures, satisfactions and frustrations, as well as important lessons learned. And it wishes to continue doing so, for the good of the country, the regions, and its communities.
Colombian Association of Oil and Gas