Colombia Looks to Reinvigorate Upstream Sector after Oil Price Shock

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The collapse of oil prices has taken a toll on FDI, export revenue and government revenues in Colombia, forcing action to be taken to relieve budgetary pressure and maintain natural gas self-sufficiency into the future. Production and reserves growth has stalled under pressure from persistent low prices, and reserve replacement from new discoveries has slowed as international investment in new exploration has been cut back. The government’s reaction has been forthcoming and several measures have been introduced over recent years in an attempt to prevent the decline of the Colombian oil and gas industry. Improvements already made to the royalty framework will benefit licenses currently held in the exploration phase which may provide some stimulus in the short to medium term and more flexible licensing procedures are likely to lead to greater uptake of available exploration acreage. However, based on recent lifecycles from exploration to production any newly awarded areas over the next two years will be unlikely to add significant production before 2025.

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