• 3 minutes e-car sales collapse
  • 6 minutes America Is Exceptional in Its Political Divide
  • 11 minutes Perovskites, a ‘dirt cheap’ alternative to silicon, just got a lot more efficient
  • 23 hours How Far Have We Really Gotten With Alternative Energy
  • 2 days The United States produced more crude oil than any nation, at any time.
  • 1 day China deletes leaked stats showing plunging birth rate for 2023
  • 3 days The European Union is exceptional in its political divide. Examples are apparent in Hungary, Slovakia, Sweden, Netherlands, Belarus, Ireland, etc.
  • 7 days Bad news for e-cars keeps coming
U.S. Crude Is Dominating Global Oil Markets

U.S. Crude Is Dominating Global Oil Markets

Surging U.S. crude exports, particularly…

These Are the World's Biggest Oil Reserves

These Are the World's Biggest Oil Reserves

Russia's discovery of colossal oil…

Matthew Smith

Matthew Smith

Matthew Smith is Oilprice.com's Latin-America correspondent. Matthew is a veteran investor and investment management professional. He obtained a Master of Law degree and is currently located…

More Info

Premium Content

Colombia Looks Offshore To Revitalize Its Oil Industry

Colombia Offshore

After an exceptionally tough 2020 and poor start to 2021 for Colombia’s oil industry, the country’s energy ministry is betting on an offshore oil exploration boom to revive the economically crucial hydrocarbon sector’s fortunes. A lack of major hydrocarbon discoveries for more than two-decades, coupled with a lack of proved petroleum reserves, are weighing heavily on Colombia’s economy.

Those issues are exacerbated by an emerging domestic security crisis, heightened political turmoil, nationwide anti-government protests and a near failed peace deal with Colombia’s largest guerilla group the FARC. By bolstering petroleum exploration off Colombia’s Caribbean coast, the government hopes to boost hydrocarbon reserves and ultimately boost flagging crude oil and natural gas production.

This has become a particularly pressing issue because of Colombia’s considerable economic dependence on crude oil and Bogota’s desperation to reactivate the economy after a grueling 2020 where GDP shrank 6.8%. The anticipated expansion of Colombia’s hydrocarbon reserves has failed to occur, despite much of its territory opening to hydrocarbon exploration after the conclusion of the peace accord between the national government and the FARC in 2016. On 1 June 2021 Colombia’s Ministry of Mines and Energy announced (Spanish) that proven oil reserves at the end of 2020 had fallen by 11% year over year to 1.8 billion barrels. Those petroleum reserves, which have a meagre production life of just over six years, are substantially lower than any of Colombia’s oil producing regional neighbors including Venezuela, Ecuador, Brazil of Guyana. Natural gas reserves also declined, falling 6.9% compared to 2019, to 2.95 trillion cubic feet. 


This has sparked considerable consternation in the administration of President Ivan Duque because of Colombia’s economic and fiscal dependence on crude oil. Nearly a decade ago, Bogota had pinned its hopes on unconventional hydrocarbon exploration and production with Colombia estimated to have nearly seven billion barrels of recoverable shale oil and 55 trillion cubic feet of shale gas. The introduction of hydraulic fracturing to Colombia has provoked substantial opposition. It has been essentially stymied at every turn with the Andean country’s State Council, its highest administrative court, temporarily banning the controversial hydrocarbon extraction technique in 2018 and again in 2019. While fracking projects are allowed and currently underway, the future of unconventional hydrocarbon production is highly uncertain. That is magnified by considerable community opposition and the oil industry’s deteriorating social license.

The substantial economic risks associated with those events are magnified by Colombia’s faltering oil output. During May 2021, average daily oil production (Spanish) fell by 3.9% year over year to 703,478 barrels while natural gas output popped by a healthy 3.4% to 970 million cubic feet daily. As a result, overall hydrocarbon output of 870,770 barrels of oil equivalent per day was a worrying 2.6% lower compared to a year earlier.

Source: Colombia Ministry of Mines and Energy & U.S. EIA.

Most of that decline can be attributed to recent anti-government protests where road blockades forced many of Colombia’s onshore drillers to shutter operations during May 2021. Most of those blockades have been lifted and production has recommenced at the affected oilfields, boding well for higher output during June 2021.

Nonetheless, the poor proven reserve and declining oil output sees Bogota pinning its hopes on offshore hydrocarbon exploration to attract urgently needed foreign energy investment to reinvigorate the oil industry and boost reserves as well as production. As a result, Colombia’s hydrocarbon regulator the National Hydrocarbon Agency (ANH – Spanish initials) in March this year launched (Spanish) the Andean country’s 2021 bid round. There are a total of 32 blocks on offer, of which 28 are offered by the ANH and four nominated by industry participants. Of the blocks offered, 23 are onshore and the remaining nine offshore including acreage in the Choco onshore and Tumaco offshore frontier basins.

The 32 Blocks Offered Bid Round 2021

Source: ANH.


The ANH estimates that the combined recoverable hydrocarbon resources of the blocks on offer is 1.1 billion barrels of crude oil and nearly 1.3 trillion cubic feet of natural gas. Those considerable recoverable resources, along with Colombia’s lack of proven hydrocarbon reserves, underscores the considerable importance of successfully executing the auction. The latest presentation from the regulator shows that expressions of interest close on 31 August 2021, with proposals to be submitted by 26 November and counteroffers allowed up until 7 December. The ANH will then award those blocks without counteroffers by 17 December and those with counteroffers by 27 December 2021. The awarded contracts will have a six-year exploration period and a 24-year production phase. 

Colombia’s offshore Caribbean is fast becoming a popular destination for foreign energy companies. In early 2020, Shell acquired a 50% interest from Colombia’s national oil company Ecopetrol in three offshore Caribbean blocks Fuerte Sur, Purple Angel and COL-5, all of which are in the Sinu basin. Fuerte Sur contains the Kronos-1 well where hydrocarbons were discovered in 2015 while the Gorgon-1 and Purple Angel discoveries are in the neighboring Purple Angel block. Shell became the operator of the blocks and is slated to drill an appraisal well in the area by the end of this year.

In a recent Bloomberg interview Colombia’s Energy Minister Diego Mesa stated that Exxon, Repsol and Ecopetrol are planning to drill in Colombia’s offshore Caribbean during 2022. The emerging popularity of Colombia’s offshore Caribbean oil basins is underscored by their considerable hydrocarbon potential. It is estimated that there could be recoverable hydrocarbon resources of up to one billion barrels of crude oil and 12 trillion cubic feet of natural gas. Those numbers indicate that any major discoveries in the region would give Colombia’s meagre oil and natural gas reserves a solid boost, thereby enhancing their production life while allowing drillers to ramp-up production. If that were to occur it would deliver Colombia considerable economic benefits while reducing the significant risks associated with reduce oil production.

By Matthew Smith for Oilprice.com

More Top Reads From Oilprice.com:

Download The Free Oilprice App Today

Back to homepage

Leave a comment

Leave a comment

EXXON Mobil -0.35
Open57.81 Trading Vol.6.96M Previous Vol.241.7B
BUY 57.15
Sell 57.00
Oilprice - The No. 1 Source for Oil & Energy News