Postconflict and the Colombian Oil Industry

The Latin America and Caribbean Oil & Gas Security 2015 Forum, scheduled to occur in Bogotá in March of 2015, will host a discussion on the impact that the peace process with the FARC and the ELN might have on the Colombian oil and gas industry. According to the report, this discussion will focus on the question of how secure Colombia will really be, even if a peace agreement is signed. This news reminds of the fact that a peace agreement will not automatically usher Colombia into a new, conflict-free era. The FARC and the ELN are not the only illegal armed groups that operate in Colombia, and even if these groups lay down their weapons, other groups might take up the FARC’s profitable method of holding Colombia’s oil infrastructure hostage.

In unrelated news, Bloomberg reported that Colombian state oil company Ecopetrol is considering delaying its planned expansion of the country’s Bicentenario oil pipeline because there isn’t sufficient oil production to justify the investment. We have talked extensively about Colombia’s lack of oil infrastructure. Many parts of the country are effectively cut off to production because the only way to transport the oil is by truck, a very expensive option. With better infrastructure, Colombian oil can be more profitable, and lead to a positive cycle of improved returns and increased investment in oil infrastructure. This news is a worrying sign.

Friends of the Earth International, likely taking advantage of the heightened media coverage of environmental issues thanks to the U.N. Climate Talks, released a report slamming the British-South African mining company Anglo American for its activities regarding the large Cerrejon coal mine in northern Colombia. According to Friends of the Earth, Anglo American has actively sought to squash investment in renewable energy alternatives to protect its investment in the highly controversial and environmentally destructive Cerrejon mine.