Ecopetrol sharpening focus on offshore gas, renewables

Colombian state-run oil company Ecopetrol will prioritize the development of offshore fields in an effort to avert a future natural gas shortage, executives said on Wednesday. 

According to the energy ministry's latest 30-year national expansion plan, Colombia could lose its gas self-sufficiency within 18 months unless new reserves are incorporated. 

"It is evident that the reserves we have today are insufficient to have all the demand for gas covered in the medium and long term," Ecopetrol natural gas chief Yeimy Báez told analysts in a quarterly earnings call. "That's why the development of the discoveries that we have recently announced in the offshore Caribbean basin is essential."

Ecopetrol currently operates three offshore blocks – Fuerte Sur, Gua Off 1, Gua Off 10 – and is a partner in two others alongside Shell (Purple Angel) and Petrobras (Tayrona). 

In addition, its subsidiary Hocol holds a 100% operating stake in the RC-7 block within the Sinu offshore basin. 

During the call, CEO Ricardo Roa remained noncommittal about whether the company would lobby the government to stage new licensing rounds.

Since taking office last year, President Gustavo Petro has kept a pledge to stop issuing new E&P contracts as part of a broader plan to wean the country off fossil fuels and prioritize renewable energy.

"With technical rigor and good sense, we have sat down at the technical tables with the [government] to show what we have to work with in terms of our contracts," Roa said. 

"We will continue to work within our current contracts and help the institutions understand the macroeconomic impact that new contracts might or might not bring."

Meanwhile, Roa said the company will push ahead with plans to generate utility-scale renewable energy, despite doubts about whether it is legally possible. 

Under current laws, generators in Colombia are prohibited from participating in the transmission and distribution segments because of conflict of interest concerns. This is pertinent because Ecopetrol acquired a controlling stake in Medellín-based Interconexión Eléctrica (ISA), Latin America's largest transmission company, for US$3.6bn in 2021.

"We cannot ignore the great potential that there is in this region for energy that is sourced from wind and solar radiation," Roa said. "This possibility has been well documented and constitutes one of the items included in our 2020-40 business plan."

The comments come as Ecopetrol reported a second quarter profit of 4.09tn pesos (US$1.02bn), down 61% from the same period last year. The company blamed the result on falling oil prices and the collateral impact of higher interest rates, the global economic slowdown and falling energy demand in China.