Colombian Oil Industry

The Colombian oil industry continues to be buffeted by two competing pressures: on the one hand, world oil prices continue to plummet, reaching some of their lowest levels since 2008. Colombia has followed suit, finding a market for its oil exports in China by undercutting OPEC prices. 

Traditionally, Colombia has exported the bulk of its oil to the United States, but decreasing demand in the U.S. has forced Colombia to export more to China and Mexico.

The Colombian journal Portafolio.co ran several articles detailing the ongoing Colombian search and debate for new oil reserves in the country. Francisco Lloreda, president of the Colombian Petroleum Association, drew attention to the economic crisis that Colombia will face in 6 to 7 years if the country is unable to find and access new oil reserves. He of course argued that fracking will play a key role in Colombia’s oil future. Margarita Flórez, director of the environmental NGO Environment and Society, highlighted the environmental dangers that fracking presents, particularly in a country with such a high rate of seismic activity. Mr. Lloreda brushed aside these concerns, arguing that, “[Fracking] has risks, but if things are done right, those risks decrease signficantly.” Not exactly a statement that inspires confidence, especially in a country with an ongoing armed conflict.

Additionally, studies carried out by the National University of Colombia in the Vaupés – Putumayo basin of the Amazon uncovered prospective reserves of 2.4 billion oil barrels, a boon to the country’s oil industry. Of course, these results are still very preliminary, but there are several hurdles that need to be overcome before these reserves could be exploited. First, the government would have to assuage environmental concerns regarding oil exploration in one of the world’s most important ecosystems. Secondly, given the ongoing FARC attacks on oil infrastructure in the Putumayo and Amazon regions, security in the area will need to be significantly improved.