What are the effects of Colombia’s biggest gas finding?

Last week, Colombian President Juan Manuel Santos was overly optimistic about the future of the energy sector in Colombia and the Andean region. It wasn’t without reason: Ecopetrol –Colombia´s state oil company and one of the top four in Latin America–, along with Anadarko Petroleum Corp, discovered the biggest gas fields in the country in the last 28 years. This, as Santos said, will allow to “further expand the Colombian market for natural gas”.

Regarding the discovery and future plans that have come out from it, Juan Carlos Echeverry, president of Ecopetrol, is mostly pleased about the job they have done. Working side-by-side with Anadarko made things much easier for the Colombian company. Despite the low oil prices, Ecopetrol trusted the research done by technicians at the Petroleum Corp and, clearly, it paid off. Right now, Ecopetrol has a constitution of 80% oil and 20% gas. The new gas fields will even the scale, increasing gas participation to 40%. In the long run, having a more even constitution would let Ecopetrol compete with companies such as ExxonMobil and Shell.

At first, the drilling necessary for this project seemed like a risk. However, Echeverry says that they trusted the research and went for it. The bet paid off, not only for the oil company, but also for the market as a whole. "The presence of a set of gas fields in the area opens the possibility for Colombia to develop a cluster specialized in gas production", representatives of Ecopetrol said after the discovery. The president of Ecopetrol also stated that this finding would require more investors. Hence, it opens the door for cooperation around the region.

The discovery also puts Ecopetrol on a whole new league. As Echeverry highlights, “the development of the last two years of our technical team is impressive. In fact, we have jumped from a local league to the international league and, this way, the progress of Ecopetrol and the country has been immense.”

Although the new gas fields represent an important step forward for Ecopetrol, Anadarko has stressed that is still necessary to increase the oil deposits, since it will help to develop the gas industry. For now, the gas fields barely classify for commercial development.

If this discovery is a sign of future growth and increase in foreign investment, Colombia could expect a prosperous decade or two. However, this depends on favorable Government stimulus and the efficient addressing of resources. Can we expect that proper public policies will help further growth of the oil market and the Colombian economy?

LatinAmerican Post | Juan Sebastián Torres

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