“The unification of criteria on energy transition within the Government is positive”: President of the ACP

As part of the Congress Colombia Genera 2023, organized by ANDI, the executive president of the Colombian Association of Oil and Gas (ACP), Francisco José Lloreda Mera, described the unification of criteria within the national Government regarding the energy transition as positive; especially the announcement from the ministries of Finance, Foreign Trade, and Mines and Energy, which states that the timing of that transition will depend on an export transition, achieving a more diversified and less oil and coal-dependent economy, and the fiscal and macroeconomic sustainability of the country.

“It is an announcement that the country was waiting for, as part of the recognition that the energy transition cannot depend solely on energy and environmental goals, however commendable they may be, especially when it is known that the impact of the sector's activity on the global climate crisis is minimal and that the main challenge of the energy transition in Colombia lies not in the energy supply but in the demand; that is, in the transition of the automotive fleet,” said the industry leader.

In this regard, Lloreda highlighted the benefits of increased investment in clean energy, the gradual substitution of fossil fuel demand, greater energy efficiency, the review and flexibility of regulations to accelerate the generation of clean energy, and the reindustrialization of the Colombian economy, announced by the Government. He noted that “these are important objectives that, like those that will determine the timing of the transition, will require concrete actions, goals, and indicators, which hopefully will be included in the National Development Plan, so that, as the Government indicates, they are evaluated permanently.”.

Regarding the policy of oil and gas exploration and production, the ACP leader stated that the Government's statement seems to condition it, rightly, to the four determinants of the announced transition (export transition, economic diversification, reduced dependence on oil and coal, and fiscal and macroeconomic sustainability) and to the monitoring of the annual reports of proven hydrocarbon reserves officially certified by the National Hydrocarbons Agency, ANH.

According to the Executive President, it is expected that the 2022 reserves report will show an increase in proven reserves (P1) of oil and gas, not only due to the exploratory efforts made by companies but also because of the high oil prices in 2022, which averaged USD 100 per barrel, and which would allow for the realization of resources that were previously not possible. When prices are high, it is possible to develop oil and gas that is more expensive to extract; therefore, a volume of reserves that were considered probable (P2) is reclassified as proven (P1) and others, considered possible (P3), are temporarily reclassified as probable (P2). “It will be good news, which should be understood in the contextual situation of last year's prices,” Lloreda assured.

The industry leader also pointed out that existing oil and gas contracts require strong support from the national Government, the Congress of the Republic, and regional authorities to be successful; they need rigorous speed in licenses and permits; the application of the law and security in the territory; and to be vigilant about legal and regulatory initiatives that hinder their development and institutional coordination. “The Ministers of Finance and Mines and Energy have expressed their interest and determination to advance these contracts, a task in which they have the support of the industry,” he added.

Finally, Lloreda congratulated the companies Promigas and TGI for connecting the gas pipelines from the interior of the country with those on the Caribbean coast, making it possible to send natural gas in both directions, facilitating the supply of the hydrocarbon to both markets. “It is extraordinary news; the next step should be to agree on a fairer distribution system for the cost of transportation so that all regions have access to natural gas at reasonable prices,” he said.

“From the ACP, the association that represents natural gas producers, we will continue to work tirelessly so that this gas is produced domestically and not imported; so that we have the infrastructure and regulation that allows us to develop it and that it reaches the final consumer, encouraging demand; and so that, in the not-too-distant future, Colombia exports not only oil but also natural gas, making the energy transition possible,” concluded the President of the Association.