45% of the 2021 exploration budget will be focused on the search for natural gas: ACP

The Colombian Petroleum Association (ACP) presented the latest economic report Trends in E&P Investment in Colombia 2020 and Outlook 2021, which projects for 2021 an investment in oil and gas exploration and production between USD 3.1 billion and 3.45 billion, that is, 51% higher than that of 2020, an atypical year due to the Covid-19 pandemic and the fall in international crude prices.

• For 2021, an investment in oil and gas exploration and production is projected between USD 3.100 and 3.450 million
• The exploratory investment will be concentrated in the Caribbean region; while the investment in production will be mainly allocated to Meta and Santanderes
• The rebound in E&P investments will be fundamental to boost economic dynamism, employment, and social reactivation in the regions

The report, prepared based on the planning and preliminary budgets of the companies surveyed by the ACP, shows the growing interest in natural gas by the companies. Thus, for this year, 45% of the total exploration budget will be focused on the search for gas. Likewise, it is projected to allocate USD 400 million to develop gas production, which represents 15% of the total investment in production and maintains the growing trend towards this energy source.

“A rebound in sector investment is good news for the country, as not only does the oil and gas industry guarantee the generation of fiscal resources that allow the Nation and regions to leverage public investment in strategic projects for economic and social reactivation, but it also guarantees the self-sufficiency of the country, which will require energy for its industrial reactivation,” said the president of the ACP, Francisco José Lloreda Mera.

At the regional level, exploratory investment will concentrate in the Caribbean region, mainly in Córdoba, and mostly on land, where a significant part of the resources will focus on the search for natural gas. For its part, the investment in production will be directed mainly to the department of Meta, which will continue to be the main recipient of investment, followed by Santanderes, Casanare, Antioquia, Putumayo, and Huila.

“Natural gas is gaining more strength in the energy matrix, so it is not surprising that its participation has been growing in recent years. Colombia has geological potential, but for it to be developed, it is necessary to promote the growth of its demand, which implies measures that facilitate timely marketing, competitive transportation to consumption centers, and promote competition on equal terms. This will be key to boosting the growth of this energy source in the country, the supply, and the reliability required in an energy transition process,” explained Lloreda Mera.
Finally, the report highlights that 95% of the investments in 2021 will take place on land, while in offshore and unconventional deposits (YNC), investments will be oriented towards developing studies and other activities prior to exploratory drilling, which is expected for 2022.

Investment climate

The report also presented the results of the survey on the country's investment climate, which evaluates 11 fundamental aspects for the sector: prospectivity, competitiveness of goods and services, fiscal aspects, availability of infrastructure, contractual aspects, environmental, social, political stability, regulatory security, prior consultation, and operational security.

This year, the overall rating averaged 5, placing it in the acceptable range, recording a decrease compared to the rating given in 2019 (6/good). Of the 11 evaluated elements, there remains only one completely favorable perception of the country, which continued to be Political Stability, which improved from 63% and 65% in 2018 and 2019, respectively, to 75% in 2020.

The perception of Prospectivity, which had always been a strength of the country, is now mostly seen as neutral or indifferent. In the rest of the evaluated aspects, a perception categorized between neutral and weakness continues to prevail.
“The responses from the surveyed companies invite us to continue working, together with the Government, on the structural issues that need improvement to regain interest in investing in Colombia. It is necessary to promote the growth of the natural gas market, reduce pipeline tariffs, ensure greater regulatory security, review contractual issues, optimize environmental licensing processes, among other aspects that are fundamental for the country to attract investment, develop its potential in oil and gas, and generate the necessary resources to drive economic and social reactivation,” concluded the president of the ACP.

[prefix_calltoaction title=»Economic report Trends in E&P investment in Colombia 2020 and perspectives 2021» button_text=»Download» button_link=“https://acp.com.co/web2017/es/asustos/economicos/691-informe-economico-tendencias-inversion-e-p-en-colombia-2020-y-perspectivas-2021”]For more than a century, the hydrocarbons sector has been a fundamental ally for the economic and social development of the country, thanks to the fiscal revenues it contributes to the Nation and the regions, as well as to social and environmental investments, generating economic dynamism and employment in the areas of operation. Only in 2019, the year prior to the pandemic caused by Covid19, the fiscal contribution of exploration and production companies of oil and gas, transportation, refining, and distribution of fuels, plus the dividends from Ecopetrol, totaled $26.2 trillion (17% of the current revenues of the Central Government)2.[/prefix_calltoaction]