New Royalty Law will bring significant benefits to the regions and the country: ACP

The Colombian Petroleum Association (ACP) highlights the enactment of the Law that regulates the operation of the General System of Royalties, and celebrates this reform as a positive change for the oil and gas producing regions, as well as for the country's economic reactivation process.

 

• Allocations for the producing regions increase from 11% to 25%
• Specific resources are allocated for environmental protection
• Royalty resources are fundamental for social investment and economic reactivation

 

“The new law is an incentive for regions with hydrocarbon production, as they will have additional resources that are now more relevant for their reactivation in a post-pandemic scenario; but the reform goes further, benefiting not only the producing regions but also the most vulnerable municipalities in the country and, in general, all Colombians,” said the president of the ACP, Francisco José Lloreda Mera.

This process highlights the consensus of political, economic sectors and regions regarding the need to modify the 2011 reform and correct the negative effects it generated, especially the decrease in income in the producing regions.

With the new law, direct allocations for these regions increase from 11% to 20%, with the option to receive an additional 5% as an advance in municipalities with exploratory activity, emphasizing autonomy for managing their projects. Additionally, resources for the poorest municipalities are increased from 10.7% to 15%; and, for the first time, specific resources are allocated for environmental protection, up to 5%. Furthermore, the reform also eliminates centralized approval processes for allocations to producing municipalities and departments, providing greater agility, autonomy, and efficiency in the execution of resources.

The ACP hopes that this new reform will also help improve the relationship between the industry and the regions, build trust, as well as the surrounding conditions for the development of operations. “Since royalties are directly related to production, and producing requires the exploratory phase, it is important that there are conditions that allow for the production of oil and gas, to generate these economic resources,” explained Lloreda Mera.

According to official figures, in recent years, royalty resources have contributed 17% to the reduction of poverty in Colombia, demonstrating that the sector is one of the largest contributors to social investment. This also shows the importance these resources will have for the economic and social reactivation process in the post-pandemic.

In this context, the ACP makes a respectful call to the political sectors and to Colombians, to reach a consensus on the importance of this industry for generating resources for social and environmental investment, and invites to depoliticize energy policy and understand the strategic importance that the development of projects has for the country, both in conventional and unconventional deposits, as well as offshore. “In this industry we have an opportunity for the production of royalties that will contribute to the social and economic development of the regions and the country, the invitation is to take advantage of it,” concluded the president of the ACP.