Let's work together for the regions

The year 2019 concludes with regional elections, with new departmental and local leaders, as well as members of the assemblies and councils. The majority of these leaders will take office on January first, 2020, starting a four-year term. 

To all those elected who are in areas with the presence of the oil and gas industry, through exploration, production, refining, transportation, and distribution of hydrocarbons, may this be the opportunity to congratulate you and, even more importantly, extend our message of commitment to work together for the sustainable development of the regions.

[prefix_blockquote cite=»Francisco José Lloreda, President ACP» align=»right» pull=»yes» italic=»yes»]May this be the opportunity to congratulate the governors, mayors, deputies, and councilors elected on October 27. From the industry, we are committed to having an increasingly active role and working together to generate even more shared value, as well as ensuring better utilization of oil and gas resources to contribute to productive diversification in the regions where we are present.[/prefix_blockquote] The hydrocarbon industry has been present in Colombia for over 100 years, and throughout this time we have seen positive transformations in many corners of our country: economic development, strengthening of road infrastructure, job creation, social mobility, among many other benefits, leveraged by hydrocarbon activity.

There are voices that doubt the development in oil regions, or that had expectations that the presence of the industry would contribute more to their regions; perhaps things could have been done better or differently, as this is not an infallible industry; however, Colombia and its regions would not be what they are today if this sector had not existed. The contemporary history of the country is linked to hydrocarbons.

[prefix_blockquote cite=»Francisco José Lloreda, President ACP» align=»right» pull=»yes» italic=»yes»]The hydrocarbon industry has been present in Colombia for over 100 years, and throughout this time we have seen positive transformations in many corners of our country: economic development, strengthening of road infrastructure, job creation, social mobility, among many other benefits, leveraged by hydrocarbon activity.[/prefix_blockquote] A recent analysis by the Colombian Petroleum Association (ACP), based on figures from the National Planning Department (DNP), establishes that oil municipalities in departments with industry operations have better institutional and fiscal performance than non-oil municipalities, and, even more relevant, the inhabitants have a better quality of life based on multidimensional poverty indicators. This does not mean that there are no problems or that the presence of the industry has not caused negative impacts; the truth is that in most cases, the progress of oil localities and regions, as well as the country in general, is evident.

Now, it is clear that we still have great challenges. Particularly in social and environmental sustainability, it is crucial to recognize the role of this activity in the past to ensure that we effectively convert subsurface resources into progress on the ground.

The oil and gas industry truly wants to work hand in hand with the regions, but there is a gap between the expectations of these and the reality of the sector, whose activity is energized or slowed down according to multiple factors beyond its control (oil prices, regulatory and environmental conditions, security, among others). This gap and the fact that in some regions it is expected that this industry is called to replace the State in its essential responsibilities have led to undermining levels of trust, making dialogue and joint work difficult. This is evidenced in various manifestations of conflict in the territory.

It is noteworthy, for example, that 62 percent of the blockades to the sector's operations, as of April 2019, are due to labor issues and the hiring of goods and services, that is, to a conflict that arises from the interest of community members to work with the industry; 31 percent relates to requirements or needs that are the responsibility of the State; eight percent to issues with easements, and three percent to environmental concerns. Therefore, it is not a rejection of the industry as is sometimes simplistically stated, but rather that there are areas with so many needs and such a precarious presence of the State that companies in the sector are seen as one of the main or the only opportunity for individual and collective progress.

In not a few cases, however, behind the acts of fact prevail particular, economic, and political interests, and specialized organizations are formed that, with or without violence, transgress the rights of third parties, as if it did not matter.

Achieving a change in the relationship between government entities, the industry, and companies in the sector with the regions – with their authorities, public and private institutions, legitimate community representatives – requires a renewed willingness from all. It is about teaming up for development, understanding and valuing local aspirations and business activity, as well as making regional and local development plans a beacon; furthermore, where there are Territorial Development Programs (PDET), to seek, with other economic and social sectors, to make them a reality.

[prefix_blockquote cite=»Francisco José Lloreda, President ACP» align=»right» pull=»yes» italic=»yes»]A recent analysis by the Colombian Petroleum Association (ACP), based on figures from the National Planning Department (DNP), establishes that oil-producing municipalities in departments with industry operations have better institutional and fiscal performance than non-oil municipalities, and, more importantly, residents have a better quality of life based on multidimensional poverty indicators.[/prefix_blockquote] From the industry, we are committed to having an increasingly active role and want to work hand in hand with governors, mayors, deputies, and councilors to generate even more shared value, as well as ensure better utilization of oil and gas resources to contribute to productive diversification in the regions where we are present.
For this, we are linked to several initiatives, including the reform of the General System of Royalties (SGR), so that producing regions have a fairer and more equitable share of oil revenue, through an increase in direct allocations. The challenge, once approved - as we trust it will be - is to give it the appropriate use, allocate it to strategic initiatives that leverage regional development as much as possible, and, locally, to priority projects that result in growth and quality of life for the people. Equally important is that it be done with transparency: royalties cannot continue to be the spoils of the corrupt, as unfortunately happens in many of our entities; hence many citizens do not value this source of income, as they do not see its results.
Similarly, from the Association and with the National Government, we work to invest in a timely manner and in projects of greater regional impact the environmental resources related to the 1 percent forced investment, as well as environmental compensations.

[prefix_blockquote cite=»Francisco José Lloreda, President ACP» align=»right» pull=»yes» italic=»yes»]It is clear that we still have great challenges. Therefore, achieving a change in the relationship between government entities, the industry, and sector companies with the regions - with their authorities, public and private institutions, and legitimate community representatives - requires a renewed willingness from all.[/prefix_blockquote] In addition, we are implementing a Self-Regulation System of Good Practices for companies, which aims to measure the quality of management, communicate the sector's performance beyond the law, and promote continuous improvement in social, environmental, occupational health and safety, human rights, ethics and transparency, value chain, due diligence, and relationships, among others. This is because transparency is an increasingly crucial priority for the industry, which is why we are helping to make the EITI Initiative, of Transparency in Extractive Industries, a reality, which seeks to strengthen sector governance in terms of open and responsible management of the resources contributed to the State from the sector's activity.

These are some of the actions we have been advancing from the industry. Now, the biggest challenge and, at the same time, a great opportunity, is to work together with the regions to align objectives and find synergies. We are committed to this and from now on we extend a message of commitment and open and constructive dialogue to the new rulers. In this activity, you have an ally to leverage the development of your regions, to sow and reap great achievements in the next four years. Count on us!