Natural Gas Supports Colombian Hydrocarbon Outlook Amid Energy Transition
Sizable offshore findings and the worldwide preference for natural gas will power Colombia’s economy and hydrocarbon industry over the long term, according to a new report from Fitch Ratings.
In the short term, Colombia will still need to rely on crude to meet its energy needs, especially for transportation, and to maintain economic growth, government spending and foreign currency inflow.
While strong crude prices and a robust pipeline of existing contracts will support the Colombian energy industry in the short and medium term, Colombia’s crude oil reserves are expected to be flat or decrease slightly in the next few years. Additionally, the lack of bidding rounds for new exploration licenses raises questions about the industry’s longevity.
Colombia has established its commitment to decarbonization, with leading oil and gas company Ecopetrol S.A. (BB+/Stable) developing natural gas reservoirs for the transition and non-traditional renewable sources, including solar, wind and hydrogen. The development of gas reserves will require costly investments of time and capital, funded primarily from the hydrocarbon industry, which has the largest financial and technological resources at its disposal.
Source: Fitch Ratings