Why Oil Firms Are Pumped About The Colombia Peace Deal
Decades of civil war have ravaged Colombia's environment and undermined opportunities at oil exploration. Now with peace looming, big and small firms alike are ready to pursue the government's "sustainable" energy plan.
BOGOTÁ —After years of attacks and pipeline sabotage from Colombia's leftist guerrilla forces, and environmental protests of local activists and indigenous communities, the country's oil industry is smelling an opportunity with the historic peace deal between the government and the FARC to end half a century of civil war.
Just one figure may offer an idea of what big oil has lost in the government's battle against the forces of the Revolutionary Armed Forces of Colombia (FARC): Energy infrastructure like pipelines have been dynamited more than 2,500 times in the past three decades.
Now, the government has put out the Hydrocarbons Sector Territorial Strategy ("Estrategia Territorial del Sector Hidrocarburos"), to regulate the sector's "sustainable" future in territories pinpointed for exploration.
Big, medium and smaller oil firms have all declared their eagerness for a new era. "If we were in Colombia in the worst periods of conflict and insecurity, we'll certainly do so now that we can see the light at the end of the tunnel," says Orlando Velandia Sepúlveda, who heads the state hydrocarbons agency ANH, citing conversations with sector representatives.
The peace deal inked last week with the FARC, he says, "is the best news for the oil sector."
In the past three years, the country has spent more than 20 billion pesos ($6.8 million) in developing the new energy strategy, considered a model for peacetime economic development to be implemented in 12 departments across the country. The program has prevented at least 150 illegal acts against energy-sector activities that would have incurred losses to Colombia of more than 200 billion pesos ($68 million). "The war impeded evaluating" geological prospects in many regions, which Velandía says are now being "freed" for exploration.
Measuring the toll
Attacks against Ecopetrol's transport installations have spilled more than four million barrels of oil into the environment, the firm states in a report. Worst affected was the Limón-Coveñas pipeline, which has suffered more than 1,300 attacks, followed by the San Miguel-Orito pipeline, which in 2013 alone suffered 635 attacks using dynamite.
Ecopetrol has put the total cost of pipeline repairs at 500 billion pesos ($171 million). Many in Colombia see the energy sector as a potentially huge engine of development and source of money for social programs. The company did maintain its activities in several areas where guerrillas were active, notably the southern departments of Caquetá and Putumayo, and Arauca on the Venezuelan frontier.
Ecopetrol's president, Juan Carlos Echeverry, says the main challenge emerging from the peace accord is "to reach an understanding with these forces that are going from guns to politics, so they understand that we can pursue our activity with the highest standards to benefit all Colombians." But even if Ecopetrol may no longer have to worry about FARC, both indigenous groups and environmental activists will be following their every move.