Colombia commemorated a century of the commercial discovery of its hydrocarbons, an opportunity to look back and better understand the origin of this industry in the country and how it has been closely linked to its economic, political, social, and cultural reality.
The origin and the launch of the oil industry, at the beginning of the 20th century, posed great challenges for the Colombian state still under construction, for foreign companies, for investors, and even for the adventurers who risked seeking the sprouts of “black gold.”.
It was a time of profound changes in the country. By 1902, the Thousand Days' War was ending, and in 1903 Colombia lost Panama, an event in which the United States played a decisive role.
Amidst this vibrant political and cultural activity of the first two decades of the 20th century, the hydrocarbon industry was born, which began with the launch of the first oil well in 1918: Infantas 2, found a few kilometers from Barrancabermeja, Santander; and then continued with the changes made in contracting and concessions, which gave greater momentum to this nascent industry.
[prefix_blockquote cite=»Malcom Deas.»]“The greatest damage done to this industry is the actions of the ELN. Groups dedicated to extorting the industry and blowing up pipelines have seriously harmed the sector”[/prefix_blockquote]
Rodolfo Segovia, former president of Ecopetrol and historian, who participated in the discussion “Presence of the oil and gas industry in Colombia from a historical perspective,” within the framework of the I Oil and Gas Summit, explained that during this period the government and companies had to define policies to promote and take advantage of the discovered deposits, but they were also forced to adjust them according to the conditions in which they were produced. “First came the concessions; then came what was called association contracts, which constituted another major milestone in oil. Yumbos, Caño-Limón, and Cusiana were wells that operated under this scheme, which worked very well until Ecopetrol faced financial difficulties to make investments along with its corresponding partners. That was what led to the sidelining of the model and the start of new schemes. At that moment, it was clear that we were a country with oil, but not an oil nation; this, supported by the great difficulties presented by the extraction of the hydrocarbon,” Segovia expressed.
In the context of analyzing this first century, Fernando Cepeda, a doctor in Law and Political Science, who also participated in the discussion, recognized as one of the greatest challenges that the industry has had to face, the violence caused by armed groups outside the law. “The ELN has been addicted to the pipeline,” he says, referring to the multiple explosions of pipelines, which have caused natural disasters and significant economic losses.
Over the last 38 years, 3.7 million barrels of crude oil have been spilled due to attacks on all oil infrastructure, which, if translated to current prices, would represent about 2.2 billion dollars in losses. Since 1986, attacks by the ELN guerrilla have amounted, in time, to the system being out of service for a period exceeding 10 years.
In that same vein, Malcom Deas, historian Fellow of All Souls College at the University of Oxford, highlights that “the greatest damage done to this industry is the actions of the ELN. Groups dedicated to extorting the industry and blowing up pipelines have seriously harmed the sector.”.
[prefix_blockquote cite=» Rodolfo Segovia»]“At that moment, it was clear that we were a country with oil, but not an oil nation; this supported by the great difficulties presented by the extraction of the hydrocarbon”[/prefix_blockquote]
At the moment of recounting this century, Deas also highlighted the evolution that the hydrocarbons sector has undergone over time: «I remember that in the eighties an English executive from Shell said that Colombians did not understand the international game of hydrocarbons: ‘when it should loosen, they tighten; and when it should tighten, they loosen.’ However, this has changed. Awareness around the oil economy has grown, although there is still a need to develop expertise to understand the international business of the sector.”.
Another of the major challenges that the sector must address, according to Deas, is that “it must assume the presence of ultra-environmentalists who seek to eliminate oil, and this creates a clear need for it to educate Colombians, showing the positive value it brings to the economy and the progress of the country.”.
History with an international accent
The Colombian oil industry took its first steps in parallel to those of neighboring nations with the existence of deposits, as was the case of Venezuela. “The scenario of the two countries was very similar at the beginning of the 20th century: agricultural and rural, without communication routes, with very high illiteracy rates and a life expectancy that barely reached 30 years. However, from 1914 to 1921, when the first oil discoveries were made, the world turned its eyes to the two countries,” explained Humberto Calderón, former Minister of Energy and Mines of Venezuela.
The 100 years of the history of hydrocarbons in Colombia are also a recount of what the sector has contributed to the growth of the country at different times. A contribution that has been fundamental to boost infrastructure, exports, employment, and resource generation, which translates into a push for the development of Colombia and its regions.
Colombian Association of Oil and Gas