Oil worries in Colombia

Even the FARC’s release of kidnapped Colombian General Ruben Alzate was not enough to force the dangers facing Colombia’s oil industry out of the headlines. The peace talks can’t resume soon enough, but without oil revenue, there will be no way to pay for the post-conflict.

As described in Semana’s report, the Colombian oil industry is beset by problems on all sides. The industry’s most immediate and pressing concern is dwindling reserves. Colombia has just 6.5 years worth of oil left and needs to increase explorations to have a chance of maintaining current levels of production totaling approximately 1 million barrels of oil per day. According to Semana, Francisco José Lloreda, president of the Colombian Petroleum Association (ACP), warned that between 300 and 400 exploratory wells will need to be drilled in Colombia in 2015, a substantial increase on the 113 wells that were drilled in 2014.

Humberto Calderón Berti, President of Verti, an oil company with operations in Colombia, cautioned that due to lower oil prices, some Colombian oil fields will need to be shut down. He said that the lack of infrastructure in Colombia makes some oil field prohibitively expensive. It looks like it will be even harder for Colombia to hit its production target of 1 million barrels per day in 2015.

Francisco Lloreda also spoke with El País and El Tiempo about OPEC’s decision not to lower its production target below 30 million barrels of oil per day. He said that though OPEC’s decision was not a surprise, it means that oil prices, currently hovering around $70 per barrel, will likely stay depressed through all of 2015. Nonetheless, Colombian Housing Minister Mauricio Cárdenas explained that a surging dollar has limited the impact of lower oil prices on Colombia’s national budget. The United Nations disagreed, warning that if oil prices continue to fall, which is very possible, then the Colombian economy could fall into a severe recession.