The world is at a decisive moment regarding the economic model supported by an energy system that has been in place for over 150 years. The path towards the decarbonization of the economy, which aims to materialize by 2050, requires going through an energy transition, the management of which will be key to the economic and social progress of countries, particularly those still developing like Colombia.
For the latter, according to the scenarios of the National Energy Plan 2022-2052 of UPME, 67% of final energy consumption comes from petroleum-derived fuels and gas, and even under the most disruptive scenarios, the projection is to reduce this percentage to 40%. This means that hydrocarbons will continue to be necessary for several decades. Thus, the transition must be thought of in terms of demand and supply, as the supply of fuels will remain a structural imperative for energy policy.
In this sense, the hydrocarbons sector has taken on the commitment to be part of the management of the energy transition as a fair and beneficial process for all Colombians. The country has the necessary potential for its energy self-sufficiency, and the exploration of hydrocarbons is essential to guarantee it while transitioning towards the diversification of energy sources, achieving decarbonization goals, promoting productive transformation, and reducing poverty.
Regarding the latter, the Territorial Development Monitor of the Hydrocarbons Sector, which analyzes changes in the quality of life identified in the country's producing regions across 12 dimensions related to social, economic, and environmental aspects over the last 10 years, found that hydrocarbon-producing municipalities in Colombia register higher indices of social and economic well-being, evidencing that this industry is critical for the social development of the regions.
For this reason, one of the main tasks we have for 2024 is to make evident and show the enormous benefits that this sector has brought to the regions of Colombia. We are aware that many issues persist, such as security and public order, gender violence, and lack of sufficient opportunities in the formal labor market, for example. Therefore, we will work to contribute to the implementation of the development plans of the new local leaders starting in January 2024.
The sector has created a network of alliances that allow it to fulfill its social function and contribute to the transformation of territories without replacing the State; which, in turn, must continue to strengthen its capacities to eliminate the foundations of informality, illegality, and criminality, fulfilling its role of generating appropriate conditions for investment and decent work and facilitating the operations of the sector in environments that today face serious security and conflict challenges.
There are clear opportunities in 2024, in the unblocking of suspended contracts and in advancing the environmental and social licensing stages of offshore projects, which will require efficient and coordinated management between the industry and institutions. Today, in many regions, there are destructive dynamics of relationships between the State, some communities, citizens, and the business sector. As Colombians, we want to contribute to generating and strengthening constructive relationships that forge alliances with the capacity to execute projects for the common good.
It will be a decisive year for natural gas, in which regulatory management in commercial matters to unblock bottlenecks to large development projects will be fundamental; as well as the timely definition of an efficient remuneration methodology for gas transportation infrastructure, which is a priority to consolidate the resources and reserves necessary for the transition and energy self-sufficiency of the country, which is at risk.
In terms of competitiveness, uncertainty regarding legal and tax security, combined with increasing social conflict, poses considerable challenges to attracting new investments. Therefore, it is necessary to implement measures and protocols that mitigate risks and guarantee the continuity of operations in the regions.
In the liquid fuels distribution sector, an essential service for the functioning of the economy, efforts are focused on dissolving the causes of blockades and public order disturbances that are jeopardizing the supply and distribution of fuels in the territories. Additionally, clear regulatory signals are required to promote investment in the fuel distribution sector, in order to ensure supply, reliability of service, and also promote efficiencies that contribute to reducing emissions and improving the quality of fuels.
In conclusion, in this industry we believe that the complex problems facing Colombia can be resolved through the joint work of communities, government, and companies; and in the process of building the roadmap for the energy transition, including productive diversification and seeking regional economic capillarity. For this, we have the mission to define a Colombian-style transition, taking into account that we are a country where
20 million people live in conditions of poverty and where there are humanitarian dramas that must be resolved; a transition that conceives oil and gas as allies to drive sustainable development, as we are a sector that is always willing to engage in dialogue, committed to developing operations in harmony with communities and the environment, as well as with the timely and coordinated management of the factors that affect the viability of its operations and jeopardize its contributions to energy security and closing social gaps.
Colombian Association of Oil and Gas