Investment in exploration in Colombia will be the highest since 2014: ACP

For the eighth consecutive year, the Colombian Association of Oil and Gas presents the Investment Trends Report in Exploration and Production (E&P) in Colombia, with the balance of 2021 and the outlook for 2022. 

The report highlights the increase in investment for exploration in 2022, where USD 1.130 billion will be allocated, 2.2 times higher than that executed in 2021 (USD 520 million) and the highest recorded since 2014.

• In 2022, investment in oil and gas exploration and production will amount to USD 4.400 billion, 42% higher than that of 2021.
• The Caribbean region will be the main recipient of investment in exploration, followed by the Eastern Plains. In production, Meta continues to be the main destination for investment.
• In the investment climate, improvements at the regulatory level stand out; in contrast, social conflict was the main weakness.

“From the ACP, we see these projections as good news for Colombia, as greater exploratory investment translates into dynamism for local economies, job creation, social and environmental investment, and opportunities for the regions; moreover, exploration is the production of the future, that is, the guarantee of the country's energy self-sufficiency, and of the fiscal revenues that Colombia receives from the production and export of its energy resources,” stated Francisco José Lloreda Mera, Executive President of the ACP.

For this year, the growing interest in natural gas is also highlighted, which represents 52% of the total projected investment in exploration (USD 591 million). Likewise, USD 930 million (82% of the 2022 investments) will be carried out onshore and the remaining offshore (USD 200 million), including the drilling of two wells in deep waters.

The regions that will receive the highest percentage of investment are: the Caribbean, which continues to be the main recipient of exploratory investment (USD 487 million). 59% of the investment will be carried out onshore; and the total investment allocated to offshore projects in Colombia will be executed in this region. Likewise, in the Caribbean, 78% of the investment focused on the search for natural gas will be executed, which is essential to meet the requirements for this product for internal consumption with a growing demand.

The Eastern Plains are the second region with the highest exploratory investment with a budget of USD 361 million, which will be executed mainly in Meta (USD 140 million) and Casanare (USD 139 million). 12% of the exploratory budget will be executed in the Santanderes and the remaining is distributed in other regions of the country.

Regarding the investment allocated to production, it is estimated at USD 3.270 billion, that is, an increase of 27% compared to 2021 (USD 2.570 billion), essential to maintain production and compensate for the natural decline of 17%. By regions, the department of Meta will continue to be the main recipient of investment in production with USD 1.417 billion, followed by Casanare (USD 470 million), Santander (USD 384 million), Arauca (USD 234 million), Antioquia (USD 165 million), Putumayo (USD 118 million), and Huila (USD 94 million).

“Despite the significant investment efforts, we see that the average daily oil production for this year will be 760 thousand barrels per day, still below pre-pandemic levels; for the country, it is of utmost importance to increase production if we want to take advantage of the current international oil price situation and the current exchange rate. A higher crude production represents greater income for the Nation and for the regions through royalties, as for every dollar that the price increases, the country receives annually between 350 and 400 billion pesos in additional income, which translates into investments and development for Colombians,” emphasized Lloreda Mera.

Investment climate

The E&P Investment Trends Report also presents the results of the investment climate survey, where significant changes compared to 2020 are evaluated; the aspects that improved and those that worsened in Colombia during 2021; and the impact of the investment climate on the exploration and production strategy of companies.

According to the results, almost two-thirds of the surveyed companies believe that there were changes in the investment environment in 2021 compared to 2020. Among the aspects that improved are: the efforts of the ANH to promote the reactivation of exploration, the Colombia Round 2021, the progress regarding the reduction of transportation tariffs by pipelines and gas pipelines, among others. On the other hand, among the aspects that worsened are: social conflict, especially during the national strike; political pre-electoral uncertainty, among others.

“The projected increase in investment for this year, both in exploration and production, which will total USD 4.4 billion in 2022, 42% higher than in 2021, is a good sign of the country's economic reactivation and the advances in regulatory matters; we hope to continue working to improve the factors that continue to affect the investment climate in order to strengthen the country's competitiveness and energize a sector that is strategic for Colombia and the regions,” pointed out the President of the ACP.

[prefix_calltoaction title=»Economic Report Trends E&P Oil and Gas in Colombia 2021 and Perspectives 2022» title_color=»#fb6a1b» button_text=»VIEW REPORT» button_link=»https://acp.com.co/web2017/es/publicaciones-e-informes/economicos/844-informe-economico-tendencias-e-p-petrole-y-gas-en-colombia-2021-y-perspectivas-2022/file» button_background=»#00ae31" background="#fffef6"]The global economy is in the process of reactivation after the isolation measures adopted in the last two years to mitigate the COVID-19 pandemic. The recovery of various economic activities has allowed for historic growth figures and increases in the demand for energy resources worldwide. In the case of Colombia, the country has not been immune to this reactivation and, of course, to the role that the hydrocarbons sector plays in it.[/prefix_calltoaction]